Core Points About Volume Price Analysis – Patience!
[00:00 ~ 02:22] The webinar begins with an introduction emphasising the risks involved in trading and the importance of using money one can afford to lose. The primary focus is on Volume Price Analysis (VPA), a methodology that combines price action and volume to determine the validity of market moves and identify trading signals as price action develops.[02:22 ~ 05:52] VPA consists of five key elements: candle patterns, support and resistance levels, price action context, volume interpretation, and multiple time frames. The webinar is prompted by a question from a trader in India about interpreting a shooting star candle on the Pound Yen using VPA, highlighting the importance of understanding how to read candles in context rather than in isolation.[05:52 ~ 09:34] The presenter analyses the shooting star candle from both the 10-minute and 5-minute charts. She clarifies that while the candle is not a textbook example of a shooting star, the accompanying high volume signals underlying weakness at that price level. Traders must consider how aggressively they want to respond to such signals, balancing between immediate entry and waiting for confirmation.[09:34 ~ 12:27] Managing entry decisions after observing VPA signals depends on the trader’s risk appetite. Aggressive traders might enter with smaller position sizes to test the signal’s validity, whereas conservative traders may wait for further confirmation. Importantly, these signals often lead to sideways consolidation, which requires further analysis of subsequent price and volume developments.[12:27 ~ 14:56] The timing of market sessions and session crossovers significantly affects price action and consolidation phases. For example, midday periods often see reduced trading activity and sideways price movement, which is normal and should be factored into trade decisions.[14:56 ~ 18:32] The trader from India also discussed using risk/reward ratios in his VPA trading. Although the presenter and her husband have different views on fixed ratios, the trader improved his reward ratio from 2:1 to 4:1 by applying VPA and multi-timeframe analysis. The use of key support and resistance levels, such as Camarilla pivot points, helps identify probable price targets and areas of consolidation.[18:32 ~ 22:18] The use of Renko charts is introduced as a way to smooth price action by removing candle wicks and focusing on price moves of a preset number of pips. Renko charts help highlight significant support and resistance levels more clearly and can improve discretionary decision-making on price objectives rather than relying on fixed risk/reward targets. The presenter shares practical insights on how their proprietary indicators work well with Renko charts on platforms such as NinjaTrader and MT4.Key Conclusions
[03:00 ~ 05:52] Volume Price Analysis is a powerful tool that requires reading price and volume together, considering candle patterns in the context of prior price action, and employing multiple time frames to confirm signals. No single candle pattern or signal should be traded in isolation; consider context and volume.[08:20 ~ 11:52] Aggressiveness in trade entries after VPA signals depends on individual trader psychology and risk tolerance. Using smaller position sizes to test signals mitigates risk and allows traders to add to positions if the market confirms the signal.[12:27 ~ 14:56] Market session timing influences price behaviour and must be factored into VPA trading strategies. Consolidation during low-activity sessions is normal and does not invalidate signals; instead, it requires patience and careful observation.[14:56 ~ 16:50] Fixed risk/reward ratios, such as 2:1, while common, may limit trading effectiveness. A flexible approach informed by VPA and multiple time frame analysis can improve reward ratios, allowing traders to maximise their gains while controlling risk.[18:32 ~ 21:53] Renko charts provide a clearer visualisation of price trends by filtering out noise from candle wicks, making them useful for identifying support, resistance, and consolidation areas. This can enhance discretionary trading decisions and reduce dependence on rigid price targets.[21:53 ~ 22:18] The presenter recommends using Renko charts alongside their VPA indicators on supported platforms, emphasising that not all Renko charts are created equal, especially those retaining wicks, which may not align with proper Renko methodology.Important Details
[00:00 ~ 01:38] The webinar was conducted during extreme weather conditions in Hampshire, causing potential power failures and interruptions. The disclaimer reminds participants that trading is risky.[01:38 ~ 02:58] The five elements of VPA include candle patterns, support/resistance, time frames, volume, and price action context. The methodology is taught in more detail in their Forex program.[02:20 ~ 04:49] The question from the Indian trader related to a shooting star candle on the Pound Yen pair, a classic reversal signal, which was analysed on both 5-minute and 10-minute charts with volume considerations.[05:53 ~ 07:46] A “true” shooting star candle typically has a small real body near the bottom, with a long upper wick, appearing at the top of an upward trend and accompanied by high volume. The candle in question had some, but not all, of the characteristics.[07:46 ~ 10:41] The price had a strong run-up with heavy volume before the shooting star appeared, followed by a consolidation phase. The reversal candle’s volume was significant but not extreme, suggesting weakness and requiring confirmation.[10:41 ~ 13:12] Sideways consolidation after VPA signals is common and influenced by trading session overlaps and breaks, such as lunchtime in London, leading to decreased volatility.[13:12 ~ 15:26] The Indian trader uses fixed risk/reward ratios (initially 2:1), but after mastering VPA and multiple time frames, he improved to 4:1, demonstrating how methodology enhances trading discipline and performance.[15:26 ~ 17:55] Camarilla pivot points (levels like R4, R5, R6) serve as significant support/resistance zones that price respects during moves and consolidations, helping traders anticipate probable turning points.[17:55 ~ 20:26] Renko charts were explained as a form of price chart that builds bricks of a fixed pip size (in this case, 4 pips), ignoring time and filtering out wicks to show a cleaner trend. Price levels like R6 and R4 on Camarilla pivots align with Renko support/resistance.[20:26 ~ 22:18] The presenter warns that many Renko charts on the market are not genuine if they retain wicks. Their VPA indicators are compatible with genuine Renko charts on NinjaTrader and MT4, with Tradestation versions in development.Throughout the webinar, the importance of patience, contextual analysis, and flexible risk management in trading is emphasised rather than rigid adherence to particular candle patterns or fixed ratios. The collaboration between the presenter, her husband David, and the community (including traders from India) highlights the interactive and evolving nature of learning VPA, combining practical chart work with theoretical knowledge.
Future Live Sessions
The webinar also hints at future sessions covering order flow analysis, which complements VPA by providing institutional trading insight, but this was not covered in the current session due to technical limitations.
The presenter frequently refers participants to additional resources, including their Learn Forex page and companion books for deeper study, as well as worked examples of VPA methodology across markets.
The session emphasises multi-time frame analysis as a core practice, meaning traders should look at signals on lower time frames (e.g., 5-minute) while also confirming trends or key levels on higher time frames (e.g., daily, weekly) to improve trade accuracy.
The discussion of candle patterns includes common reversal types such as shooting stars, hammers, bullish engulfing candles, and two-bar reversals, each with nuances in interpretation depending on volume and market context.
The presenter encourages traders to treat VPA signals as probabilistic rather than certain, manage risk size accordingly, and allow signals to develop rather than rush entries.
Market session overlaps (e.g., London and New York) and their impact on volume and volatility are important factors in deciding when to enter or hold off on trades.
The webinar also touches on the psychological aspect of trading, such as how traders’ confidence levels influence their aggressiveness in entering positions after signals.
Finally, the presenter stresses that the market “will give what it will give,” advising traders to be flexible and adapt their price objectives based on market behaviour rather than fixed targets.
As traders, we are often impatient, eager to jump, especially when we see a strong signal in volume-price analysis. But this is where patience does pay off, as the first signal is often just that, as we wait for confirmation, and this principle is explained in this video for the pound yen.
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00:00
Introduction and power failure warning
00:00
The webinar begins with a welcome and an apology for any interruptions caused by power failures due to severe electrical storms in Hampshire. The host introduces herself, Anna, and her husband David, who is present but off-camera. Before starting, Anna emphasises the importance of the trading disclaimer, reminding viewers that trading is risky and to only use money they can afford to lose.
01:05
Overview of volume price analysis (VPA)
01:05
The segment introduces volume price analysis (VPA) as a methodology used to assess the validity of price movements on charts, distinguishing genuine moves from fake ones by analysing price action alongside volume. It explains that VPA involves five key elements, including candle patterns, support and resistance levels, and multiple time frames. The speaker mentions that these concepts are integral to their forex program and hints at detailed lessons to follow.
02:20
Trader’s question about VPA signals
02:20
The speaker discusses a question from a trader in India who trades in Indian markets and has purchased related books on volume-price analysis. This trader frequently sends screenshots for quick feedback on his understanding of the methodology. The inquiry coincides with the speaker’s own analysis of the pound-yen price action, specifically a shooting star candle on a five-minute chart.
03:36
Analysing the shooting star candle signal
03:36
The speaker discusses the complexity of interpreting strong trading signals such as shooting stars, hammers, bullish engulfing candles, and two-bar reversals. They emphasise that trading decisions are not binary and depend heavily on an individual’s risk tolerance and trading style. It’s important to consider the candle’s context, including prior price action, time frame, and key support or resistance levels. While volume is a factor, understanding order flow—particularly from an institutional perspective—is crucial, though it is not addressed in this segment.
05:53
David is introduced to analyse the Nasdaq using fast charts like Renko and time charts. The discussion shifts to a specific screenshot sent by a viewer, which highlights a candle with heavy volume beneath it. The question is whether this candle is a shooting star. The speaker clarifies that, strictly speaking, it is not a shooting star or an up-thrust candle, as those have distinct characteristics and are essentially reversals.
06:31
Context and volume interpretation
06:31
The segment explains how to interpret a candle at the bottom of a trend, ideally positioned at the top of the range on shorter timeframes, such as the 5-minute chart. The key observation is that price rises, then falls to close near the candle’s open, signalling underlying weakness despite volume. The speaker emphasises the importance of context, showing an example of a stock that had a strong run with heavy volume on up candles, followed by a reversal marked by a large down candle and subsequent consolidation. The presence of strong candlestick patterns, such as shooting stars and hammers, often tempts traders to jump in immediately, but these can precede significant reversals, warranting caution.
08:20
Trading styles: aggressive vs conservative
08:20
The speaker discusses how to interpret a dramatic V-shaped reversal on a five-minute chart, emphasising the importance of the trader’s style in deciding whether to take the signal. Aggressive traders may act quickly based on volume and signals, while conservative traders should wait to see how the signal plays out in context.
09:34
Looking at the 10-minute chart, the speaker analyses a widespread up candle with moderate volume followed by a candle showing weakness, indicated by a wick at the top and similar volume. This suggests a potential reversal at the top of a trend, resembling a shooting star pattern, which could be a strong signal depending on volume and close proximity to the open.
10:44
The price has reached resistance from a previous high, and even aggressive traders should consider managing risk by testing the signal with a smaller position size. The speaker advises adjusting risk exposure based on confidence level—starting small and adding to the position if the trade moves favourably—highlighting risk management as key regardless of trading style.
11:53
Signal development and market consolidation
11:53
The speaker explains that signals in all time frames require time to develop, often entering a sideways consolidation phase. This consolidation is not due to traders losing interest but is influenced by session crossovers. For example, a move higher starting around 9:30 continued before showing signs of weakness and shifting into sideways movement from midday to the start of the US session—a common pattern in forex markets.
13:11
The market operates 24 hours a day, but activity levels vary, often slowing around lunchtime in London. Traders tend to pause during these lulls, waiting for the US session to start. The speaker shares commentary from a trader in India who uses volume price analysis (VPA) and prefers setting fixed risk-to-reward ratios, specifically a two-to-one ratio, which contrasts with the idea of keeping rewards open-ended to maximise potential gains.
14:21
The Indian trader has improved his risk-to-reward ratio to 4:1 by applying volume-price analysis and using multiple time frames. Using multiple time frames helps identify likely price directions and potential price pauses. This approach aids in better understanding market structure and decision-making.
15:30
The speaker discusses technical chart levels, specifically Camarilla levels such as R6 and R4, which act as significant resistance points where price tends to consolidate. The market struggled to break above the R6 level and showed a weak candle on the 10-minute chart, indicating consolidation around this key level. This reinforces the idea that session timings and significant price levels both contribute to consolidation phases.
16:41
Camarilla levels and price consolidation
16:41
The speaker analyses recent price movements, noting multiple attempts to rise that were met with weakness, including an engulfing candle that failed to surpass the original high. The price eventually broke through support levels R5 and R4, and is now moving sideways. The discussion concludes with a mention of the Renko chart version of the Pound Yen price action and a reference to earlier analysis available on the learn forex page.
17:55
Renko charts explained and price action
17:55
The speaker explains the Renko chart and its benefits, emphasising that it smooths out price action by eliminating candle wicks, which are not part of a genuine Renko chart except during volatile price movements. Each Renko brick completes only after the price moves a preset number of pips, in this case, four pips. The chart shows a move higher on the equivalent of a 10-minute chart, followed by a pullback and consolidation, illustrating how Renko charts filter out noise and highlight key price movements.
19:12
The discussion shifts to key support and resistance levels, particularly the Camarilla levels R4 and R6. A clean break from R6 is seen, but the price tends to oscillate and retest these levels before making a decisive move. The price attempted to break lower but was supported strongly at around 138.39-39.77, near the R4 level, preventing a significant drop. The speaker highlights the importance of these levels for setting discretionary price targets rather than fixed ratios, suggesting traders use them to determine realistic price objectives.
20:33
Discretionary price objectives with levels
20:33
The speaker discusses price levels where a currency pair might be heading, noting that it could be around 8, 12, or 15, emphasising the need to accept market realities. They address questions about Renko charts, clarifying that in their view, true Renko charts do not have wicks. While some Renko charts with wicks exist and might or might not work with their indicators, their indicators function well with the Renko charts available on NinjaTrader and MT4. They are also developing indicators for TradeStation, but caution users to test any Renko charts that differ from their standard format.