An interesting session for the open the US markets, and one where there was some divergence between the NQ emini and the YM emini. For the former it was a case of sideways congestion with extreme volatility as the exchange opened alongside Globex. For the YM it was a case of joining the steady and even trend higher as the Dow set off to reverse yesterday’s losses. Across both the time and non time based charts of the renko and the tick, this developed into a wonderful trend with the index climbing steadily and moving through the various levels of support and resistance.
One of the interesting questions which came up during the session was the question of scaling in and scaling out. Every trader has to find what works for them as there is never a right way or wrong way to approach trading.
In this morning’s session once again we focus on some of the key concepts of support and resistance using the accumulation and distribution indicator for NinjaTrader and the dynamic support and resistance indicator for MT4/5. The AUD/USD provides some good examples from the faster to the slower timeframes as the pair tests a strong level of support in the session on the 60 minute chart.
One of the many trading concepts we also discuss is using multiple timeframes to search out the levels in higher and lower timeframes. Finally we also look at support and resistance from the aspect of overbought and oversold with the currency strength indicator for NinjaTrader.
Support and resistance is a key component of the volume price analysis methodology and in the London session Anna and David use various examples in various timeframes to explain the underlying concepts, and supported with the Quantum Trading tools and indicators for MT4, MT5 and NinjaTrader.
In this session Anna and David look at several examples and in particular for the British pound and the euro as we move from the European open and into the London trading session. The pound has been in sharp focus for the last few weeks as Brexit concerns continue and the prospect of no deal with Europe. The longer term trend for the pound remains bearish but for how much longer?
Gold has been very bearish on the longer term charts and in the early part of the London session this has continued on an intraday basis, as we trade gold on the MT5 platform. The Quantum Trading tools and indicators work in exactly the same way for trading gold, or indeed any other commodities, stocks or indices which are available on the MT5 platform.
Also here we focus on the Trend Monitor indicator which helps us to stay in and not be shaken out of a strong position when the market pauses or reverses temporarily. This is one of the hardest things to do in trading, and is where profits are made and lost.
Also here we have the Quantum USDX dollar index running in parallel to help in decision making as the US dollar generally works inversely for commodities.
You can find all the trading indicators for Quantum Trading https://www.quantumtrading.com
In this morning’s forex session we saw a nice move in the Aussie Dollar with some classic volume price analysis lessons when combined with the Quantum Trading indicators. The euro also produced a nice move lower with the renko charts on MT5 leading the way.
The renko charts on MT5 are unique as they allow you to add both standard indicators and the Quantum tools and indicators directly to the chart. The trends indicator and te trend monitor indicator work perfectly with this style of chart as you can see from the euro dollar in the European session just ahead of the London open.
The exciting new renko optimiser for NinjaTrader 7 and NinjaTrader 8 is here. No longer will you have to guess at the optimal setting for a renko chart on NinjaTrader. The renko optimiser indicator does it all for you automatically and with one click of a button, delivering the optimal renko brick size for all markets, instruments and timeframes. The indicator works using average true range or ATR to deleiver the optimal setting during the trading session, ensuring you are always trading at the speed of the market.
By using Average True Range the Renko Optimiser indicator starts by calculating the degree of volatility of the instrument within a given period and timeframe. You may already be familiar with ATR and by using the ATR to determine the brick size, we can eliminate the noise or volatility normally present in a candlestick chart. It is a popular technique used by traders with Renko charts but which is all automated by the Renko Optimiser indicator.
Everything is then encapsulated in a button conveniently located at the bottom of the chart. This button displays the calculated best brick size for the current market and timeframe selected. By clicking the button, the indicator automatically reconfigures the current candlestick chart to switch to an optimized NinjaTrader Renko chart using the calculated brick size.
We now have a euro index for MT5 which can be invaluable when trading a pair such as eur/jpy which has been in an uptrend since yesterday. What’s interesting about this move higher on the hourly chart is how in one move we have at least three different types of sea states. The beginning of the move higher (as denoted by trend monitor turning blue) is characterized by a trend without volatility as the pair moves gently higher before the price action goes into congestion with trend dots turning grey. We then see two strong volatility candle as the result of the BOJ & on the faster time frames we would have seen plenty of whipsaws with many traders attempting to catch some pips. However, this injection of energy into the pair has resulted in a continuation of the trend, but this time with momentum as we wider spread up candles & a much steeper incline. Typically after many such moves the trend is now look a little ‘toppy’ with volumes falling away. We now need to wait for US market to open to see if we are indeed going to see a reversal in this pair.
And, of course, any move lower will be reflected in the euro index. You can discover more at https://www.quantumtrading.com
We will shortly be launching the Camarilla Levels indicator which will be available for both NinjaTrader 7 and NinjaTrader 8 and following the succesful launch last month for MT4 and MT5. The indicator is based on the original concept of floor pivots which were popular with floor based exchange traders. The Camarilla levels indicator presents six levels from R1 to R6 and from S1 to S6 with the range between R1 and S1 then designated as the buffer zone. As the price action moves from the various levels and tests other, signals are then delivered by the indicator which help to advise traders of forthcoming potential setups as follows and to suit your trading tactics:
For reversal trading the key levels to watch are S3 and R3. These are levels which when approached signal potential reversals. So when price is approaching and tests the S3 level below the buffer zone, a reversal to the upside may be on the horizon. In other words a reversal from a bearish trend to a bullish trend in that timeframe. Equally, when price is approaching and testing the R3 level above the buffer zone, then a reversal is possible with the bullish price action reversing to bearish. In both cases the next level then denotes the level for the stop loss. For a reversal off the S3 level higher, the stop loss could be placed at S4 and for a reversal off the R3 level, the stop loss could be placed at the R4 level – assuming these levels fit your risk and money management rules.
The potential price targets are then as follows:
For an R3 reversal the profit targets are from S1 to S3.
For an S3 reversal the profit targets are from R1 to R3.
For breakout trading the key levels are the R4 above the buffer zone and the S4 below. These are levels at which the price is expected to breakout from the current region and develop a strong move away from the region. So any move to test and break the R4 level is likely to see price continue higher and develop a strong trend. Equally if the S4 level is tested, then price is likely to continue lower and develop a strong trend.
For an S4 breakout the profit targets are S5 to S6
For an R4 breakout the profit targets are R5 to R6
Using the Camarilla levels in this way offers a complete solution to two distinct approaches to trading, and in addition, also provide potential target levels along with suggested stop loss positions, but as always these must meet your risk and money management rules.
The Camarilla levels indicator is available now for NinjaTrader 7 and NinjaTrader 8 and you can find all the details at https://www.quantumtrading.com
Just a quick update on the dollar index levels on the 8 hour chart for the MT5 USDX indicator. The dollar index is currently trying to break through the S4 I mentioned yesterday at 93.97 having failed to make any progress beyond 94.20. In other words index is trading in less than a 30 pip range. This tight range & these levels will, of necessity, impact what is going on in the faster time frames and determine a) the viability of any trade & b) the risk on that trade.
Range may increase once US opens and we also have end of month flows in and out of USD as fund managers rebalance portfolios, & of course we have the FOMC tomorrow. So all in all not easy, particularly if you are only using time charts. In this type of market condition it’s important to have a non time based chart such as a renko as it will make finding entries and exits that much easier.
Levels help to frame the price action & is something we are going to be covering in more detail in this week’s webinar. Hope you can come along. You can sign up at my site at https://www.annacoulling.com
In this live session Anna and David move to the US focused markets of indices, stocks, commodities and forex and applying some of the basic principles of volume price analysis supported by the Quantum Trading tools and indicators. The primary platform used is NinjaTrader but we also showcase the MT5 platform and this provides and excellent cost effective entry to other markets, so avoiding the need for specialist brokers and increased margins. The MT5 platform covers all the markets including stocks, commodities and indices along with currencies, and so offering trading opportunities for metals, energy and some softs, along with access to the most popular indices for the S & P 500 and the Dow 30.