Volume price analysis in action on the YM Emini futures index trading

Volume price analysis in action on the YM Emini futures index trading

As risk on sentiment wained yesterday, the USD index futures delivered some wonderful trading opportunities in the strong move lower, and in this video we take a look at the bearish trend on the five minute chart for the YM emini futures contract and applying the volume price analysis methodology. This was a textbook example of the power of volume and price, not simply in helping to keep you in but just as important where to enter if you missed the initial move.

00:16

Intro to US indices and charts overview

00:16

The speaker welcomes the audience warmly and ensures audio clarity while preparing the screen layout. They introduce the focus on U.S. stock indices, specifically mentioning the YM, NQ, and ES, and set up the visual display of these indices for analysis.

00:45

YM trading range and resistance levels

00:45

The market is still trading within the range of a volatility candle, without moving outside it for weeks. There is a strong resistance level overhead with significant volume, preventing the market from pushing higher. Today experienced a notable down day with a drop of a few hundred points. The presenter mentions they will demonstrate this further using faster time frames and compares it to the NQ chart, highlighting the differences.

01:10

NQ chart showing breakout and volume

01:10

The market is continuing higher despite a doji candle appearing today, with volume decreasing as expected. The breakout is ongoing into new high ground, though the speaker advises against buying due to prior detailed analysis by Anna. The S&P 500 (ES) chart mirrors the YM chart, showing trading within a range and a volatility candle persisting for weeks. Unlike YM, the ES has managed to slowly move through this range.

01:39

ES support and resistance dynamics

01:39

The discussion focuses on a key price level that has transitioned from resistance to support, which is currently being tested. This level holds significant importance due to concentrated orders in the region, influencing whether it acts as support or resistance depending on the price movement direction. The speaker notes that the price chart behavior is quite different from the Nasdaq (NQ). Additionally, the time and sales window for the ES index is mentioned, showing real-time order flow and price movements.

02:31

Order flow and double-figure block importance

02:31

The segment introduces key concepts related to order flow analysis, particularly in the context of TradeStation. It emphasizes focusing on double-figure blocks—orders with sizes above 10 units—rather than small trades of one or two units. The goal is to identify significant clusters of large orders (15, 20, or more) to gauge the strength of buying or selling pressure. Observing whether these large blocks move the market helps determine market strength or weakness, all analyzed through the lens of volume and price.

03:19

Volume price analysis example on 5-min chart

03:19

The segment examines the linear relationship between volume and price in a trading chart, focusing on a single downward trend and subsequent reversal. It highlights the significance of the congestion phase around 2:30 PM UK time, when the US cash markets open and volume spikes sharply. The presenter explains the use of an accumulation distribution indicator to identify strong support and resistance levels, visualized by line thickness that indicates the strength of these levels based on the number of tests. This segment also describes how volume and price behavior at these levels can guide trading decisions, noting buying activity at a strong support region.

05:16

This segment continues the analysis of volume and price action near strong support and resistance levels. It details how different candlestick patterns, including narrow spread candles with varying volume levels, signal buying pressure or resistance. The presenter emphasizes the importance of volume being driven into a price region without corresponding price movement, indicating a lack of genuine momentum behind the move. This analysis demonstrates two key components of volume price analysis working together to assess market strength or weakness at specific price points.

06:11

Selling into weak market analogy explained

06:11

The segment explains a scenario where price and volume data conflict, illustrated by a narrow-bodied candle with an upper wick indicating significant selling pressure despite a weak market. This is compared to a car struggling to gain traction on an icy hill: despite increasing effort (accelerator pressure), there is no forward movement. The big market operators are selling into this weak market, forcing long positions through the system. Eventually, the market breaks down sharply, producing a classic volume price analysis (VPA) pattern characterized by a price waterfall with increasing spreads and rising volume, followed by a volatility trigger that signals an impending significant market move.

07:28

Volatility trigger and market weakness signals

07:28

The segment explains how to interpret market congestion and volume patterns. It describes encountering congestion or a potential reversal, followed by continued downward movement with rising volume. Specific candlestick patterns, such as pressure candles with high volume indicating weakness, are highlighted as signals for entry points after missed moves. The discussion includes the appearance of doji candles and volatility triggers, emphasizing the importance of personal comfort levels when deciding to enter trades.

08:19

This segment continues analyzing volume and price action, noting that significant volume does not always lead to price reversals, especially when wicks and upper bodies of candles suggest selling pressure. A bullish engulfing candle with high volume appears but fails to drive movement, followed by a doji with low volume. The market then transitions into a congestion phase after a period of heavy selling, with volume patterns indicating mixed strength and a shift from active selling to consolidation.

09:11

Congestion phase and volume decline explained

09:11

The segment explains the market entering a congestion phase where volume decreases and price action narrows, forming support and resistance levels. The speaker discusses potential scenarios for a breakout either upwards or downwards, noting the significance of volume and price points such as the volume point of control (VPOC). The analysis highlights how volume clusters and price behavior can signal market moves, especially in bearish trends where market makers sell into rallies. Additionally, the segment touches on differences observed in the Nasdaq (NQ) market using accumulation-distribution indicators to identify strong levels and clusters that influence price action.

11:08

NQ accumulation distribution and resistance

11:08

The speaker explains the significance of the 10680 level in intraday trading, noting it has been tested multiple times and serves as a crucial price resistance area. They caution that entering a trade near this level involves risk, especially if aiming for small gains like 10 to 15 points, since the market is likely to congest around this price. They contrast price-based resistance with volume-based resistance, pointing out a low volume node nearby which suggests that volume resistance might be weaker, allowing price to move through more easily despite the strong price resistance.

12:09

Risk reward and trading opportunity assessment

12:09

The speaker discusses the importance of identifying resistance levels that may pose challenges in trading and emphasizes evaluating trading opportunities based on risk and reward. They highlight the need to consider whether the potential return justifies the risk taken. The analysis involves examining the chart from a technical perspective to determine if the price action is likely to encounter significant volume or price-based obstacles. The segment concludes with a brief mention of reviewing the E-mini S&P 500 futures chart on a five-minute timeframe for further analysis.

13:08

ES chart resistance and volume outlook

13:08

The speaker analyzes the ES market, noting the absence of significant price or volume resistance, which could allow for a rapid upward move potentially reaching 3150. They highlight how this is a clear example of trading using volume profile and price resistance levels, emphasizing the value of multiple timeframes—such as 1, 2, 5, 10, and 15 minutes—for context and precision in trading decisions. The discussion illustrates how combining volume point of control with support and resistance levels aids in identifying optimal entry points.

14:32

The speaker prepares to transition to a new topic by switching screens to show an example related to gold, indicating a shift in focus for the upcoming discussion.

By Anna Coulling – creator of volume price analysis