When are the best times to trade?

When are the best times to trade?

In this video I explain how to find out what are the best times to trade for your chosen currency pair using the EUR/CAD as an example.

00:12

Introduction to forex volatility and indicators

00:12

The speaker introduces a discussion on volatility in the forex market, highlighting some specialized indicators developed for forex and other markets. Using the EUR/CAD pair as an example, they explain how its recent price reversal aligns perfectly with expected volatility patterns and trading times, illustrating the practical application of these concepts. The importance of understanding the unique characteristics of individual currencies and currency pairs, including knowledge of central banks, is emphasized as essential for successful trading.

01:26

Overview of volatility coefficient and trading modules

01:26

The video explains the structure of a comprehensive trading program that includes modules on technical analysis, fundamental analysis, related markets, and trading mechanics. It highlights a component called the volatility coefficient, which helps traders determine their trade size. The discussion then shifts to analyzing the euro Canadian currency pair using a dashboard called the CSI, which tracks whether currencies are overbought or oversold, noting a significant move in the euro Canadian.

02:34

Analyzing Euro CAD and currency dashboard

02:34

The speaker discusses the heavy sell-off in Euro currency pairs, particularly focusing on the Euro Canadian Dollar (Euro CAD). They reference a trading dashboard screenshot showing this decline and highlight the significance of this movement in the context of forex trading.

03:07

Analyzing the Euro CAD on the hourly chart reveals that after a significant drop, a reversal was likely during the U.S. session, despite this not always occurring with London session moves. The speaker explains that this reversal is partly due to the currency’s profile and introduces investing.com as a useful tool for examining this behavior.

03:44

The speaker explains how investing.com provides volatility data for various currency pairs over selectable time frames, such as ten weeks. This data includes range and pip movement, which helps traders understand the typical volatility of pairs like Euro CAD to inform their trading strategies.

04:17

Traders can view volatility data across different periods—one, three, six, or twelve months—to better assess trading opportunities. This helps determine if a chart pattern is supported by sufficient volatility, ensuring traders avoid pairs with limited range that might not present profitable trades.

04:44

Maintaining awareness of volatility is crucial for traders managing multiple pairs, including Euro CAD. Similar to stock trading where fundamental data is tracked, forex traders must monitor instrument-specific data to understand market behavior and make informed decisions.

05:12

The speaker emphasizes the importance of deeply understanding the trading instrument, regardless of trading frequency. Euro CAD has experienced large daily ranges but overall has been declining, highlighting the need for traders to stay informed about volatility and price trends.

05:39

Volatility patterns and trading session impacts

05:39

The speaker discusses trading opportunities related to market volatility, highlighting that currency pairs often move strongly around key market openings such as the London open (7-8 AM) and the US open (around 2 PM). They note that Thursdays tend to show increased movement for many pairs and emphasize the importance of understanding these volatility patterns to better time trades.

06:41

The focus shifts to analyzing the Euro Canadian pair, noting that current market conditions appear indecisive with prices clustered in the middle range. Despite Forex being open 24 hours, the speaker explains that knowing peak activity times—such as during the London session or market fixes—helps traders decide when to engage, allowing them to avoid constant screen-watching and trade more strategically.

07:39

Euro CAD congestion and price action analysis

07:39

The market has been in a prolonged congestion phase since mid-March, oscillating around the volume point of control with a mix of large-ranging and very narrow trading days. Despite this, there has been noticeable buying activity, suggesting potential upward movement possibly influenced by news affecting the Euro or Canadian dollar. Volatility is expected to be accompanied by momentum, indicating some directional move is likely even in congestion.

08:40

The speaker analyzes the trade using a Renko chart, highlighting the congestion phase visible on a 10-minute time chart adjusted for a two-hour time difference. The Camarillo indicator shows repeated failures to break the resistance level (R1 at 5347), indicating the price is struggling to rise. Volume on upward candles is weak, and candle wicks suggest selling pressure. Overall, the expectation is a likely move downward rather than upward, with the Renko chart confirming this price action trend.

10:20

Renko chart and momentum in Euro CAD

10:20

The segment explains market congestion seen on a time chart characterized by choppy movement rather than smooth trends. A volatility candle marks the start of a strong momentum move, likely driven by the London market open. Price drops sharply, then rebounds, hitting resistance at the R1 level multiple times before retracing within the volatility candle. The Renko chart reflects this downward trend with some pullbacks, indicating momentum in the move.

11:25

The discussion highlights the momentum continuing despite attempts at pullbacks, which are quickly suppressed. Resistance is noted around 52.70 with congestion before the trend resumes upward. It is emphasized that prices tend to fall faster than they rise due to the effort needed to push prices higher, which involves frequent pullbacks. The trend attempts to resume lower several times, coinciding with the US market open, as shown on a 10-minute chart with CSI indicators.

12:34

The segment details currency movements where the Canadian dollar rises while the euro falls, followed by a consolidation phase before the trend takes off again around 14:20. The price move breaks through multiple Camarillo daily support levels, reaching as low as S6 before bouncing back to retest it. These levels then serve as potential targets for trades on the rebound. The volatility chart indicates an upcoming quiet period as the market approaches the Asian session, where price action typically slows significantly.

13:50

Hourly chart and market quiet periods

13:50

The discussion focuses on the Canadian dollar and euro, emphasizing that the Canadian dollar is tied to the current trading time zone rather than being a local currency. The chart levels are refreshed at rollover, with additional levels in play until the end of the week. On the hourly chart, a notable downward move is observed, which appears as a V-shaped recovery on the 10-minute chart due to a quick two-bar reversal. The price is targeting the R4 level, which acts as a significant resistance point. The R3 and R4 levels are crucial for trading decisions, as price movement between these levels often leads to tests and potential pullbacks. A confirmed breakaway occurs if the price moves decisively beyond these levels, but trading opportunities exist on the way up.

15:34

The speaker explains that during quiet trading periods, when trader interest wanes, it may be best to close positions and wait for more active times. The hourly chart also confirms congestion seen on the daily chart, indicating a buildup phase. According to Wyckoff’s second law, prolonged congestion phases typically precede strong breakouts. This buildup acts like a wound-up spring, suggesting that when a breakout finally occurs, it is likely to be significant and powerful.

16:38

Congestion phases and trading strategies

16:38

The discussion focuses on trading strategies during congestion phases, emphasizing patience and the benefits of clearly defined stop-loss levels during such periods. Using the Euro currency pair as an example, the speakers compare different time frames, highlighting how pivot points provide clear stop-loss guidance, making trading decisions more straightforward in congested markets.

18:11

The conversation shifts to the volatility of various currency pairs, particularly the British Pound and Pound-Yen pairs. The Pound-Yen is noted for its significant daily pip movements, especially during the London and Asian sessions. They analyze daily price ranges and discuss how specific days of the week tend to show increased volatility, which can be linked to broader market events.

19:19

The speakers examine the Pound cable pair, observing similar volatility patterns and suggesting traders review daily charts to understand significant price moves. They mention the influence of upcoming UK events on volatility and highlight hourly volatility patterns, especially during afternoon sessions, providing valuable insights for timing trades effectively.

20:21

The focus turns to useful online tools and indicators that complement price action analysis, such as correlation tools and volatility data. These resources help traders gain confidence and better understand market conditions, including busy and quiet periods. The discussion underscores the importance of these tools in reducing stress for day traders and illustrates participation and volatility patterns around key market times, like the London fix.

By Anna Coulling – creator of volume price analysis