Yen pairs lead the way in an explosive day of price action

Yen pairs lead the way in an explosive day of price action

It was the risk currencies, the yen and the Swiss franc, that took centre stage as equity markets soared and gold collapsed on positive COVID news. The yen matrix in particular was dramatic, with all the currency pairs closing the day with wide spread up candles and triggering the volatility indicator as a result. As such, we can expect to see some consolidation following yesterday’s explosive moves as markets calm and absorb the news.

00:01

Introduction and webinar overview

00:01

The speaker welcomes everyone to the webinar focused on the forex and financial markets. They reflect on the surprising and intense market activity from the previous day, describing it as shocking and overwhelming. Before analyzing the charts and discussing future market movements, the speaker reminds viewers to pay attention to the disclaimer.

00:34

Volume Price Analysis methodology overview

00:34

The speaker emphasizes that trading is risky and advises never to use money that one cannot afford to lose. They introduce their methodology for analyzing markets and charts, which is volume price analysis (VPA). VPA combines price action and volume to determine the authenticity of chart signals.

01:05

Five elements of VPA explained

01:05

The methodology discussed involves five key elements of volume price analysis (VPA): price action, volume, support and resistance, candle patterns, and time. Support and resistance are analyzed not just from price but also volume perspectives. Time is considered beyond just the chart’s timeline, including multiple time frames and non-time-based charts. These tools aid in making better entries, exits, and maintaining trades. Additionally, the approach integrates fundamental analysis and considers related markets to provide a comprehensive trading strategy.

02:08

Related capital markets and indices

02:08

The segment explains capital markets focusing on bonds, commodities, and especially equities. It clarifies that when referring to indices, the speaker means the three e-mini futures for Dow Jones, S&P 500, and Nasdaq, which are the futures versions of cash markets. These futures trade 24 hours a day on the Globex platform. The speaker mentions using Investing.com to gauge market sentiment, indicating whether the global investing community is buying or selling. These indices serve as benchmarks for assessing risk-on or risk-off market conditions. The speaker also briefly interacts with an assistant during the webinar.

03:24

Using investing.com for market sentiment

03:24

The speaker introduces the use of charts and highlights investing.com as a comprehensive resource for market and instrument data. They mention developing specialized indicators with David to support the volume price analysis (VPA) methodology, tailored specifically for the unique characteristics of the forex market.

03:59

Forex-specific indicators introduction

03:59

The speaker explains that in currency trading, you are not trading a single instrument like gold or silver alone, nor are you trading one currency directly against another as in forex. Instead, the focus is on a currency strength or flow indicator that shows where money is moving in the market. This indicator reveals whether funds are flowing into currencies like the pound, safe havens such as the Swiss franc, the dollar—which can act as both a safe haven and a risk asset depending on the context—or the yen, which also serves dual roles depending on market conditions.

05:05

Currency Strength and Matrix indicators

05:05

The speaker explains the matrix indicator, which ranks currency pairs based on the strength of money flow using data from the CSI. An example shows the strongest flow into the Swiss Yen pair, indicating strong buying interest. They highlight that the matrix indicator reveals whether the movement is driven by one currency in the pair, such as Swiss buying in this case. The speaker emphasizes the importance of this indicator for understanding market dynamics in the 24-hour forex market when traders first open their terminals and assess sentiment and flow.

06:51

Market mood: risk on vs risk off

06:51

The speaker discusses assessing the general market mood, emphasizing the importance of determining whether the market is in a risk-on or risk-off state. This assessment is made by reviewing recent market activity and current conditions, using tools like investing.com to get an immediate snapshot. They note that futures were slightly up, though the S&P 500 had pulled back from a higher level earlier in the morning, while the Nasdaq was down, indicating a cautious market sentiment.

07:47

The discussion shifts to a market indicator matrix that shows values across different time frames and rates them as high, medium, or low. The speaker mentions an upcoming upgrade to this indicator, which will include a note indicating whether values are at all-time highs, averages, or lows. This enhancement aims to provide clearer insight into the movement and strength of currency pairs, helping traders understand market dynamics better. An example from a recent forum post is referenced to illustrate these concepts.

09:05

Hourly chart analysis and market movement

09:05

The speaker discusses the usefulness of the hourly chart in analyzing market movements, highlighting its ability to show past trends, current status, and potential future directions, especially regarding overextension. They mention low market values observed recently, indicating minimal movement and slight currency fluctuations. The segment ends with a reference to news about a vaccine, suggesting its relevance to the market context.

10:13

Impact of Biden presidency on markets

10:13

The speaker discusses a significant overnight market move influenced by media declarations that Biden would be the next president, despite official confirmation pending until December. This news triggered a strong rally in risk currencies such as the Australian dollar and New Zealand dollar before the London market opened, which itself was relatively quiet. The speaker mentions using a New Zealand yen chart to illustrate the price action reflecting this event in the Asian markets.

11:33

Market reaction to vaccine news

11:33

The speaker discusses the changes in market conditions around the London open and the impact of vaccine news on market dynamics. They focus on an indicator called the matrix, which measures the strength of flows into currency pairs, showing values rising from 72 to nearly 200, indicating strong market movements. The matrix, combined with other indicators like the array and CSI, provides a ranking that helps gauge the type of price action occurring and the strength of market trends.

13:25

The speaker explains how different market sessions vary in liquidity and trading opportunities, emphasizing the importance of session timing despite the forex market being open 24 hours. They note that these indicators can signal when market conditions are tricky, as observed recently. The discussion transitions to four key indicators, with a promise that David will elaborate on the currency rate and currency heat map, which consolidates multiple data points across timeframes. The speaker admits to often overlooking the currency heat map despite its usefulness and encourages its consideration.

15:10

Currency Heat Map and trend strength

15:10

The matrix is described as a sophisticated indicator that not only ranks currency pairs but also provides insights into chart movements within a specific timeframe. An upcoming upgrade will indicate whether the values shown are high, medium, or low compared to historical data. The discussion also covers related tools like the currency array, which measures trend strength, and the currency heat map available in multiple timeframes. The current market activity highlights the pound gaining momentum, with a focus on the New Zealand yen to illustrate earlier points.

16:14

New Zealand Yen chart and price action

16:14

The speaker discusses a 30-minute chart illustrating market movements influenced by news during Biden’s presidency. The Dow had surged by 400 points overnight, causing corresponding moves in risk-sensitive currency pairs. The New Zealand yen experienced most of its movement overnight in the Asian session, with limited activity during the London open. Despite initial sideways movement, the market eventually surged following vaccine news.

17:17

Vaccine news and market caution

17:17

The speakers discuss concerns about the current lockdowns and their impact on lives and the economy. They highlight that recent vaccine efficacy claims were based on a press release rather than a peer-reviewed paper, emphasizing the importance of official medical validation. They caution against premature optimism, noting that further review could reveal issues. The conversation also touches on market behavior, advising traders to rely on price action, volume, support and resistance, and candlestick patterns while remaining aware of the potential for market moves driven by rumors rather than solid news.

18:52

Market manipulation and trading mindset

18:52

The speaker discusses the manipulation of markets and acknowledges taking advantage of current conditions despite uncertainties. They note a decline in the CSI numbers, describing the market movement as somewhat erratic and less favorable compared to the previous day. Despite this, the Australian dollar, particularly the Aussie/Yen pair, remains strong and is still being bought, with general market sentiment positive on the hourly chart.

19:59

Currency sentiment and pair analysis

19:59

The discussion focuses on currency market sentiment, highlighting buying interest in the Australian dollar and potential upside in the New Zealand dollar. The speaker explains the use of 80 and 20 values as visual guides for overbought and oversold conditions, cautioning that currencies can remain in these states longer than expected. There is mention of possible reversals in some currencies, but overall sentiment is mixed. Traders are advised to consider specific currency pairs, such as euro-dollar or euro-yen, and analyze them individually to make informed trading decisions.

22:09

Euro Dollar pair and chart review

22:09

The speaker analyzes the euro dollar currency pair, noting it is down by 4.15 points. They examine the five-minute chart, observing that the price is moving sideways within a narrow 10-pip range. This sideways movement is deceptive because it might appear as a small fluctuation but actually indicates limited trading opportunities. Indicators on the chart help highlight potential trades and provide insights into current market conditions, aiding traders in deciding if a trade is viable at the moment.

23:15

The discussion contrasts two trading approaches: one that relies heavily on detailed information and indicators before considering a trade, and another exemplified by David, who is described as a ‘gorilla fighter.’ David does not focus on specific currency pairs or detailed analysis; instead, he aggressively seeks the best trading opportunities regardless of the pair. This highlights different trader mindsets—strategic and data-driven versus opportunistic and instinctive.

23:52

Trading styles and broker considerations

23:52

The speaker discusses the advantage of paying a small commission on some broker platforms, which allows for certain trading strategies that may not be viable with other brokers due to spreads. They acknowledge that some currency pairs have spreads that make short-term trades impractical. The conversation then shifts to introducing features of the Quantum Trading platform, mentioning recent updates and inviting students familiar with their forex program to explore the backend tools.

25:02

Funded Forex program overview

25:02

The program offers four students the chance to trade using a funded forex account, meaning they trade with other people’s money rather than their own. Participants can start with account sizes ranging from $5,000 to $15,000 and progress through levels up to $2 million. This setup allows traders to apply what they’ve learned in the forex trading program without financial risk. The program also helps develop discipline and the potential to earn a regular monthly income as they advance through the stages. More details are available at quantumtradingeducation.com.

26:51

Risk management and trading discipline

26:51

The speaker emphasizes the importance of strict risk and money management rules in trading. They explain that many traders struggle not because they lack knowledge or opportunities, but because they fail to adhere to these rules due to emotional influences. Following these rules is crucial to staying in the game and developing the right mindset for successful trading. Additionally, the speaker notes that confidence in handling large sums of money is key, as fear or mental blocks about large amounts can hinder performance. The principles of discipline, mindset, and approach remain consistent regardless of the account size.

28:25

Program benefits and participant Q&A

28:25

The speaker explains that joining the funded trading program only requires a one-time entry fee, with no additional costs. Participants can trade the program alongside their personal accounts. David is highlighted as the main person responsible for handling detailed questions about the program. Viewers are encouraged to ask questions in the chat or visit quantumtradingeducation.com for more information.

 

By Anna Coulling – creator of volume price analysis