Volume or price based support and resistance – here we use both!

Volume or price based support and resistance – here we use both!

Many forex traders are familiar with price based support and resistance but few use volume. In this session from the forex trading webclass you will discover the power of both when used together.

00:00

Introduction and disclaimer

00:00

The speaker welcomes everyone to the morning session and apologizes for the delay caused by the necessary disclaimer, which is a mandatory part of every webinar. They acknowledge some distractions due to recent price action in the market and remind viewers that trading involves significant risk.

00:30

Overview of Valen price analysis methodology

00:30

The speaker advises against using money you cannot afford to lose and introduces the Valen price analysis methodology used for market evaluation. This approach combines technical chart analysis with an understanding of fundamental factors and related markets, such as equities and bonds. Success in Forex trading, especially for the long term, requires integrating both chart signals and broader market fundamentals.

01:39

Drivers of Forex price action

01:39

The speaker explains that price action in forex trading is influenced by various drivers such as fundamental news, central bank actions, and geopolitical events. Additionally, the forex market is interconnected with the equity, bond, and commodity markets, meaning movements in one market can impact and even predict movements in others. The program also includes specialist indicators developed to understand currency flows on both individual currency and currency pair levels.

02:48

Forex market sentiment and risk-on/off phases

02:48

The discussion focuses on interpreting forex market charts to understand market sentiment, whether it is positive or negative, or in a transitional phase known as risk-on risk-off (or ‘row’). The speaker emphasizes the importance of viewing these sentiments directly on the chart. Viewers and students are encouraged to ask questions in the chat for further clarification, with the hosts ready to assist in explaining any concepts.

03:56

Market levels and flows concept

03:56

The speaker explains the concept of levels and flows in the forex market, highlighting how flows move into individual currencies and currency pairs. They discuss the importance of levels on trading charts, which can be created using various methods such as moving averages or freehand drawing. The levels used in their charts are both price-based and constructed to reflect market significance. A demonstration from the MT5 platform shows that solid lines indicate stronger levels that have been tested multiple times, while hatched lines represent different significance.

05:11

Price-based support and resistance levels

05:11

The segment explains the concept of price-based support and resistance levels on the Ninja platform, describing how price action tests and moves through these levels. It introduces a price-based accumulation and distribution indicator and highlights the use of volume-based support and resistance, focusing on the volume point of control. This yellow line indicates areas of price imbalance and congestion, serving as a key level in volume analysis.

06:20

Volume-based support and resistance

06:20

The discussion explains a price chart where the price is poised to break either upward or downward. The histogram represents the volume accumulated over time, emphasizing the importance of time alongside price and volume in the indicator. Support and resistance lines are shown, but volume-based levels are less critical than the fulcrum point on the chart. Price action often halts not only at price-based support and resistance but also at volume-based levels. Additionally, a developed indicator based on the Camarillo principle is introduced, which establishes a hierarchy among support and resistance levels.

07:32

Camarillo principle and multi-timeframe levels

07:32

The speaker explains the use of a line on trading charts that is weighted for importance, similar to Fibonacci levels. These levels help traders identify significant points where reversals or breakouts are more likely to occur.

08:05

The Camarillo indicator is calculated at six levels, with the r4 and s4 levels being the most important. A price move beyond these levels is considered a valid breakout. The indicator is adapted to refresh levels differently based on the timeframe used.

08:46

For timeframes shorter than an hour, Camarillo levels refresh every 24 hours, while hourly chart levels last for a week, and weekly chart levels are valid for a month. This setup supports a multi-timeframe approach to identifying key price levels.

09:21

When price reaches significant levels like r4 or s4, it typically pauses, especially if the level aligns with a higher timeframe level, making the level stronger. Breaking through such levels requires increased volume and momentum.

09:57

Understanding these key price levels and their behavior helps traders anticipate market actions, reducing uncertainty and anxiety. The indicator, combined with price action observation, provides valuable insights into likely market pauses and moves.

10:33

Impact of fundamental news and upcoming events

10:33

The discussion begins by noting that markets are influenced by various unpredictable factors, including geopolitical events and fundamental news. The speaker highlights the advantage of scheduled fundamental releases, which allow for some predictability. Recent events include the Bank of Japan’s policy rate announcement, where no change was expected, and the anticipation of a press conference that may or may not be ongoing.

11:06

Attention shifts to recent UK unemployment data, which showed a decrease in claims but still more than anticipated. The market reaction is focused on the unemployment rate returning to its previous level, though the speaker expresses some confusion about how the rate can drop even when more people are unemployed, referencing similar discrepancies in US Labor Statistics.

11:36

The segment elaborates on the unemployment rate anomaly and prepares viewers for upcoming economic events. Notably, US retail sales data will be released later, and Federal Reserve Chair Jerome Powell is scheduled for a two-day testimony before the Senate Banking Committee, which is expected to generate significant market volatility.

12:05

Jerome Powell’s upcoming testimony is highlighted as a key market event, where he will face questions from politicians regarding monetary policy. This event is anticipated to maintain or increase market volatility following recent fluctuations, emphasizing the cautious atmosphere investors should expect.

12:42

Volatility management and central bank focus

12:42

The discussion begins with addressing the challenges traders face, including how to identify and mitigate risks in the market. The speaker references the Pound ROC chart, highlighting its importance in ongoing market narratives, particularly related to the Pound and Australian Dollar. The segment then transitions to David, who will cover key topics including the recent London market open and significant central bank activities. Emphasis is placed on understanding central bank actions, especially with the upcoming Bank of England meeting, as these are crucial for effective trading strategies.

By Anna Coulling – creator of volume price analysis