Overnight news from China leaves traders puzzled!

Overnight news from China leaves traders puzzled!

Overnight news from China leaves many traders puzzled as does the move in the Aussie prior to the release.

00:00

Webinar introduction and disclaimer

00:00

The webinar begins with a welcome and a reminder about the trading disclaimer, emphasizing the risks involved and advising participants to only use money they can afford to lose. The speaker notes ongoing market activity and prepares to discuss current developments.

00:32

Hosts and volume price analysis overview

00:32

The webinar is introduced by Anna and her husband David, who will explore the forex markets using volume price analysis, a technical methodology they have applied for 20 years. They will also incorporate fundamental factors into their market analysis.

01:01

Impact of global pandemic on markets and lives

01:01

The speaker discusses the current global situation dominated by the medical and health crisis due to the pandemic. They share personal experiences of being in lockdown for several weeks due to illness in their family. The segment highlights the widespread feeling of powerlessness and lack of control during this difficult time, emphasizing the need to accept the situation and make the best of it.

02:13

Community support and trading success tips

02:13

The speaker encourages establishing personal routines to bring structure during challenging times, emphasizing that difficulties will pass. They express appreciation for the audience’s participation in webinars and highlight the sense of community. The speaker and David aim to support attendees in navigating a complex market. Drawing on feedback from readers, students, and users of their educational programs and indicators, they stress that adopting the market perspective they will explain can lead to success, especially given the importance of understanding market dynamics despite future uncertainties.

03:25

Books, indicators, and trading tools introduction

03:25

The speaker discusses a program designed to equip participants for life in the markets, emphasizing that markets are ever-present despite changes and new products. They highlight the importance of protecting oneself and loved ones while engaging in market activities. The program includes a set of indicators and specific tools for the forex market, which provide valuable insights into past, current, and future market conditions. The speaker notes the effectiveness of these tools in delivering actionable information.

04:36

Wyckoff’s three laws explained

04:36

This segment introduces the three Wyckoff laws, essential principles for understanding chart behavior in trading. These laws—effort versus result, cause and effect, and supply and demand—offer a narrative framework for analyzing past, present, and future price actions on charts. The discussion highlights Richard Wyckoff, a trader and educator from the 1930s, whose work during the Great Depression laid the foundation for these concepts. The program integrates Wyckoff’s principles with volume price analysis, candlestick patterns, timing, and support and resistance to provide a comprehensive methodology. Additionally, recent fundamental news from China is noted as an important factor influencing market conditions.

06:23

China PMI data and market reaction

06:23

The discussion focuses on the recent Purchasing Managers Index (PMI) data from China, which is crucial for assessing economic outlooks in manufacturing and non-manufacturing sectors. The PMI figures released were extraordinarily poor, far below expectations, reflecting ongoing economic struggles since the pandemic began. This data typically impacts markets strongly, particularly the Australian dollar, which reacted unusually with a sharp sell-off before the numbers were released, followed by a partial recovery. Analysts found this market behavior puzzling. Despite skepticism about the accuracy of China’s economic data, market participants must work with these figures as they currently influence trading decisions.

09:36

The presenter acknowledges the limitations of the available data and emphasizes the need to adapt to it until reporting methods change. The segment ends with a handover to a colleague named David, inviting viewers to engage with questions during this challenging period.

09:41

Community engagement and contact info

09:41

The speakers discuss the process for answering questions, noting that short questions are addressed immediately while longer ones are answered on air. They provide contact emails for direct communication and mention the active and supportive community in the private VPA traders chat room for Quantum Trading education customers. They express gratitude for the helpful contributions of students and then transition back to Anna to continue with the program, noting some market congestion observed on their trading interface.

10:37

Market sentiment and currency strength overview

10:37

The discussion begins by highlighting current market congestion and cautious sentiment around indices and risk assets. The focus shifts to analyzing the Currency Strength Indicator (CSI) to identify movements in individual currencies and pairs. Particular attention is given to the British Pound and the Australian Dollar, with the latter showing strength partly due to positive Chinese news. Other currencies like the Canadian Dollar, Euro, and Yen display varied activity, reflecting the complex market dynamics.

12:07

The speaker notes a wavering market sentiment compared to the previous day, using the hourly CSI chart to capture recent currency movements and potential setups for the upcoming session. The hourly timeframe is preferred for its balance of detail and context. A comparison is made to the previous morning’s market conditions, illustrating significant differences. An indicator developed by the speaker’s team is referenced, which provides insights into currency strength and market behavior.

13:16

Currency flow and divergence analysis

13:16

The speaker discusses the flow of money into currencies, noting a clear inflow into the Australian dollar and New Zealand dollar, with some outflows occurring as well. They highlight the presence of divergence in the market, which often signals potential reversals in shorter timeframes. The market is described as oscillating and mean-reverting, characterized by sine wave patterns that vary with timeframe. Traders, especially those who focus on reversals, look for turning points at the peaks and troughs of these oscillations.

14:20

The speaker explains the use of an indicator called the matrix, which ranks currency pairs on a ladder to show their relative strength or weakness. The indicator helps identify extremes in the market by showing numerical values that reflect buying and selling pressure. Values near zero indicate balance, while very high or low numbers signal extreme market moves. This tool aids traders in recognizing when currencies are overextended, with the speaker noting they have developed a method in TradeStation to track these extreme values effectively.

15:23

Interpreting strength and momentum indicators

15:23

The speaker discusses the importance of understanding the strength and momentum behind a market move, emphasizing that knowing whether a value is high, medium, or low can provide insights into the likelihood of the move reversing. They share an example from recent experience, noting that while a number like 63 is moderate, it can vary widely. The speaker also refers to a screenshot from the morning showing stagnant market activity, advising patience despite initial disappointment, and highlights that focusing on the right market, such as the pound-Canadian pair, can still yield favorable outcomes.

16:30

Example trade and market conditions

16:30

The speaker discusses analyzing a strong currency pair on the hourly chart, noting that despite some pullbacks and values similar to current levels, the typical reversal near certain technical levels does not always occur immediately. They emphasize that oversold or overbought conditions can persist longer than expected, as seen with the pound before it reversed. The trade eventually developed and concluded just before the US market open, illustrating common market behavior around major session starts.

17:39

The market often shows a move starting before the London open, followed by a pullback due to volatility at the session start. Using Wyckoff analysis helps determine if this is a reversal or a trend continuation. Recent market conditions have been calmer and more typical compared to the unusually large moves seen in previous weeks. The speaker notes that while some perceive this as slow, it actually represents a return to normal market behavior with more divergence and stronger underlying trends.

18:36

Trading strategies and versatile pair selection

18:36

The speaker discusses the importance of monitoring currency pairs that are actively moving in the market. Traders often have preferred pairs they focus on, but an indicator that highlights movement across various pairs can be very useful. While some traders patiently wait for opportunities in their chosen pairs, others stay flexible and look for promising moves in different pairs. The speaker uses examples like the euro, pound, and Australian dollar, noting that sometimes patience is required as these pairs may be setting up for potential reversals.

20:12

Charting tools and congestion analysis

20:12

The speaker analyzes a currency pair using multiple timeframes on Ninja Trader and a Renko chart to identify market congestion and missed price moves. They observe a move lower during the Asian session followed by sideways chopping, highlighting the volume point of control as a key indicator. The speaker, contrasting with another trader named David who focuses on extremes, prefers to trade based on congestion zones and is waiting for a clear breakout from this congestion to signal a potential trade entry.

21:17

The analysis continues with the speaker noting that congestion on shorter timeframes is aligning but not fully confirmed, suggesting a potential direction for the pair. They emphasize that a trade entry depends on a breakout from resistance and confirmation by bright blue trend indicators on the trend monitor. The speaker also mentions market choppiness due to the London session and highlights candlestick patterns, such as doji candles and buying pressure, as part of their balanced approach to timing the entry.

22:25

Trade entry considerations and risk management

22:25

The speaker discusses market volatility calming down after the London open and their strategy of waiting for low-risk, reasonably profitable trades rather than relying on fixed risk-reward ratios. They mention using various tools like Renko charts and the CSI indicator to analyze market momentum and price action. The Renko chart, set to a fixed 3-pip value, helps identify momentum through spikes, with some bricks taking several minutes to form. The speaker also references monitoring hourly charts and observing buying and weakness in certain pairs to inform trading decisions.

24:07

Momentum monitoring and Wyckoff law application

24:07

The speaker discusses the variability in trade execution times, noting it can sometimes take seconds due to momentum factors. They mention monitoring a three-minute and ten-minute chart to observe market behavior, highlighting volatility indicated by candle wicks and volume. The concept of effort versus reward is introduced, along with references to supply and demand laws and their relevance to price reversals, with a brief mention of the euro currency.

By Anna Coulling – creator of volume price analysis