Potential Reversals Now Ahead After the Storm of Last Week!
The forex market endured a storm of volatility last week. Sharp moves created exhaustion. Now, potential reversals loom. Traders watch for turning points. Volume price analysis (VPA) spots them early.
In this morning’s forex session, we looked at some of the interesting setups now on the horizon using the longer-term perspective of the currency heatmap. The currency heatmap can be viewed in much the same way as the currency strength indicator. For the heatmap, we consider pairs rather than currencies, and a great way to use the indicator is to look for the extremes as potential reversals.
With the yen now weakening following the flash crash and risk sentiment shifting, these now look like good prospects for the longer term. At the other end of the ladder, we have several euro cross pairs to consider. And all, of course, confirmed with volume price analysis and the Quantum Trading tools and indicators for MT4/5 and NinjaTrader – and more recently TradingView.
Why Reversals Follow Volatility Storms
Extreme moves often end in exhaustion. Price pushes far. But momentum fades. Divergence appears—new extremes on low volume. This signals distribution or accumulation. VPA reveals the shift before price fully turns.
Key VPA Reversal Signals
Look for stopping volume—high volume halting declines. Or climactic volume at highs/lows. Divergence warns first. Quantum Accumulation/Distribution indicator on MT5 or NinjaTrader highlights weakening phases. Trend Monitor flags fading alignment.
Practical Trading Insights
After last week’s storm, majors show signs. Watch EUR/USD or GBP/USD for volume at extremes. High volume reversal candles offer entries. Low volume spikes may trap. Anna Coulling’s VPA approach waits for confirmation—patience pays.
Potential reversals build after volatility. Quantum tools make spotting them reliable. Stay alert—volume reveals the turn.
Why Reversal Trading in Forex Is the Perfect Approach: Capturing the Full Trend in a Mean Reversion Market
Forex markets are unique. They often mean revert. Prices oscillate around fair value. Extremes create corrections. This makes reversal trading ideal. You enter early at turning points. This captures the full new trend. Trends are born in congestion—like salmon spawning at the head of the river. Quiet buildup leads to powerful runs.
Forex as a Mean Reversion Market
Currencies trade in pairs. Relational balance pulls prices back. Overbought or oversold extremes rarely last. Markets correct. This creates reversal opportunities. Volume price analysis (VPA) spots them—low volume at extremes signals exhaustion. High opposing volume confirms the turn.
Capturing the Full Trend with Reversals
Reversal trading lets you profit from the entire move. Enter at congestion extremes (accumulation or distribution). Ride the breakout and trend. Momentum traders join later—missing early gains. VPA rewards patience—wait for volume confirmation.
All trends start in congestion. Quiet phases build pressure. Like salmon gathering strength before the run. Quantum indicators highlight this—Accumulation/Distribution spots building phases.
Practical Advantages of Reversal Trading
- Bigger Rewards: Early entries offer superior risk-reward.
- Fewer Trades: High-probability setups reduce overtrading.
- VPA Edge: Divergence warns of turns. Stopping volume at lows signals bottoms.
Quantum tools on MT5 or NinjaTrader enhance this. Trend Monitor flips on reversal confirmation. VPOC marks key congestion levels.
The Salmon Metaphor: Congestion to Trend
Congestion is the spawning ground. Price ranges. Volume builds quietly. Breakout releases energy—like salmon rushing downstream. VPA reads the flow—high volume breakout validates the new trend.
Anna Coulling’s VPA methodology turns reversals into disciplined trades. Quantum tools make spotting them reliable.
Reversal trading in forex captures full trends. Mean reversion rewards early patience. Quantum indicators with VPA deliver the edge. Trade the turn—profit from the river’s flow.
By Anna Coulling