Discover the importance of the crossover on the currency strength indicator

Discover the importance of the crossover on the currency strength indicator

In this portion of the live webianr I explain how to enable the alert for crossovers on the currency strength indicator and what this means in terms of the chart.

00:12

Focus on British Pound trading pairs

00:12

The speaker discusses their focus on trading the British Pound currency pairs this month, highlighting its significance due to upcoming events involving Brexit. They mention trading pairs like Cable (GBP/USD) and various cross pairs such as Pound/Yen and Pound/Aussie (Pound/Ozzy). The Pound/Yen pair is described as tricky and influenced by algorithmic trading, often referred to as ‘the dragon.’ The speaker also notes that their Forex trading approach uses volume price analysis, consistent with their established methodology.

01:24

Forex market uniqueness and sessions

01:24

The discussion explains the approach to forex trading, emphasizing the use of support and resistance levels and candlestick patterns. Forex is unique among capital markets because it involves trading currency pairs, such as the British pound against the US dollar, effectively trading two economies simultaneously. The forex market operates 24 hours a day, but trading activity varies significantly depending on different global sessions and time zones, with higher participation and larger price movements during certain periods, especially when London and US markets are open. The example of a 5-minute chart is introduced to illustrate these concepts, highlighting the importance of understanding market activity and timing.

03:02

Arctic speed emitter for market activity

03:02

The segment explains a time and sales tool with color coding indicating market activity levels: green for high activity, orange for moderate, and red for low activity. It highlights that market activity can slow down, possibly due to anticipation of news or specific trading times, but occasional bursts of activity still occur.

03:35

This part focuses on the London trading session starting at 8:00 AM, showing increased volatility and volume during this period. The volatility trigger causes a surge in market activity, which then gradually decreases between 9:00 and 11:30 AM, although this pattern can sometimes vary.

04:10

The discussion covers market behavior between 9:00 and 11:30 AM, noting that UK news, such as Bank of England announcements, can significantly influence price movements. In the absence of news, the market may trade sideways, fluctuating around key volume points. Activity picks up again around 1:30 PM as the US market opens, marking increased trading volume.

04:46

Volume and volatility in US session

04:46

The speaker describes market behavior starting at 14:00 with high volatility, large volume, and unusual candle patterns leading to significant oscillations in currency pairs like cable. These movements include sharp reversals around the volume point of control and gradually diminishing waves as the trading day progresses. To better analyze such patterns, a currency strength indicator—essentially a flow indicator—is used to track individual currency flows, showing whether currencies are being bought or sold and identifying overbought or oversold conditions that signal potential reversals.

06:28

Currency strength and flow indicators

06:28

The speaker explains the use of matrixes that rank currency pairs based on strength using data from the CSI (Currency Strength Indicator). This helps traders identify strong and weak moves by showing average, high, or low values. The CSI provides insights into momentum in the market, indicating whether prices are moving significantly. Additionally, an ‘array indicator’ is mentioned, which tracks trends in currency pairs, but the focus remains on the CSI due to its ability to capture individual currency flows effectively.

07:29

The CSI indicator can highlight potential large reversals, demonstrated by an example where the New Zealand yen pair was overextended before reversing. This pair, being a risk currency, aligned with rising indices, making it a favorable trade. The indicator signals overbought and oversold conditions, suggesting potential reversals. Moves often become sideways or congested, identified when pairs move parallel. A particularly clever feature of the CSI is its ability to detect these nuanced market conditions and potential turning points.

08:39

CSI cross alerts for congestion breakouts

08:39

The speaker explains the use of a congestion indicator with a cross alert, which signals potential breakouts from price congestion in currency pairs. They describe using multiple timeframes—3-minute, 10-minute, and hourly charts—and highlight the indicator’s alert system that sounds a klaxon when crosses are detected. The speaker customizes the setup by isolating different currency pairs to better identify which pair the alert refers to. They mention using this tool primarily on the NinjaTrader platform and appreciate how it allows them to monitor important market movements without being glued to the screen. The indicator helps identify likely reversals and breakouts born from congestion phases, enhancing their trading efficiency despite limited screen time.

12:21

Optimal trading times for Cable pair

12:21

The speaker explains the importance of trading at the most active times of the day for the currency pair known as cable (GBP/USD). They recommend researching and identifying these peak trading periods to increase the likelihood that chart setups will follow through, avoiding times of low market participation which can cause setups to fail. A volatility calculator tool, including a UK version, is suggested for traders to analyze daily volatility and participation levels for different pairs.

13:29

Using the volatility calculator, traders can assess daily pip movement over a 10-week period (or adjustable lengths), helping to identify whether volatility is rising or falling. For example, the euro-dollar pair often shows declining daily pip movement, complicating trading. In contrast, cable tends to maintain more consistent volatility with occasional spikes. The tool also confirms trading patterns visible on charts, enhancing the understanding of market behavior.

14:40

The speaker highlights three key active times for trading cable: the start of the U.S. session, and the London session around 7 to 8 AM, extending to the London fix at 3 to 4 PM. Recognizing these periods simplifies trading decisions, especially for day traders or those trading part-time, allowing them to focus trading efforts during these high-participation windows.

15:14

The volatility pattern for cable remains fairly consistent throughout the week, with Thursdays generally being strong trading days, Fridays also good, and Wednesdays less so. The same analysis can be applied to other pairs such as pound-dollar (GBP/USD) and pound-Aussie (GBP/AUD), which have distinct volatility and trading characteristics worth monitoring.

15:46

The pound-Aussie pair has shown a declining volatility trend with smaller daily candles, indicating a congestion or consolidation phase after a sharp downtrend. Activity peaks around 2 PM and also around midnight to 1 AM due to the Aussie’s influence. The speaker introduces a recent setup on the three-minute chart for cable, involving a breakaway lower from the volume point of control zone, signaling a potential trade opportunity confirmed by a cross alert on the CSI indicator.

16:52

Multi-timeframe analysis and support levels

16:52

The speaker analyzes a three-minute chart showing a price break and subsequent decline with reasonable volume, highlighting a volume-based support level called the volume point of control. They emphasize the importance of examining multiple timeframes, using both three-minute and hourly charts, to understand price action better. The hourly chart serves as a benchmark, revealing that price halted at a key support level, coinciding with the fourth level of the Camarillo indicator, known for its significance in resistance and support.

17:52

The price stopped at the fourth Camarillo level on the hourly chart, a critical point often tested multiple times before a reversal occurs. The speaker notes that this period coincides with a quiet market phase. They suggest organizing indicators across multiple charts rather than overcrowding one. The hourly chart also shows strong support indicated by a blue hatched line from the accumulation and distribution indicator, which thickens with repeated testing, signaling that breaking this support requires significant volume.

19:34

On the 60-minute chart, price action remains within the volatility candle’s high and low, providing additional support and resistance levels, contributing to a current struggle in the Pound-Dollar pair. The speaker examines currency strength via a matrix, noting that the pound is gaining against some currencies but is relatively stagnant against the dollar. This stagnation is linked to the price being at significant chart levels that require strong momentum to either reverse or break lower.

20:45

The pound-dollar pair is lingering near key levels where a decisive move is needed to shift the trend. Earlier opportunities identified on the three-minute chart were not optimal for trading time but demonstrated the usefulness of volume and price analysis. The Renko and time-based charts confirmed these insights, showing emerging price and volume support levels alongside trend monitoring indicators. This combined analysis suggests a possible reversal higher, illustrating the value of integrating volume, price-based support and resistance, and Camarillo indicators across multiple timeframes.

By Anna Coulling – creator of volume price analysis