Reversals Clearly Signalled on the Currency Strength Indicator & Multiple Timeframes
Reversals are often signalled clearly on the currency strength indicator. Extreme readings show overbought or oversold conditions. When combined with multiple timeframes, these signals become even stronger. This approach reduces false alarms.
As we prepare for yet another Brexit dominated day, the British pound was one of several currencies in focus in the London forex trading session this morning, along with the euro and the New Zealand dollar.
For the euro, it was the early move higher which caught the eye with the currency rising strongly in the faster timeframes and on the currency strength indicator, with the Canadian dollar moving in the opposite direction with equal speed and creating a nice trend. Then as London opened, volatility became the order of the day with a potential reversal setting up.
This was also the case with the New Zealand dollar which had been rising strongly and reached an overbought condition, clearly signalled on the TradingView charts with the currency strength indicator confirming this across three timeframes. Taking a reversal trade requires patience and wider stops, but reverse it did in due course.
Finally of course to the British pound, and here the GBP index on TradingView highlighted the reversal which appeared as the London session opened with a strong move higher for the currency across all the timeframes. Whilst the pound index reflected this on the chart, the currency strength indicator also confirmed this sentiment on the 10m, 20m and 30 minute timeframes.
A great session with many trading lessons for all forex traders.
How the Indicator Works Across Timeframes
The currency strength indicator ranks currencies in real time. On higher timeframes, it spots major extremes. Lower timeframes confirm timing. Divergence between strength and price warns of turns. Volume price analysis (VPA) adds confirmation—look for volume spikes at extremes.
Practical Benefits for Reversal Traders
Multiple timeframes align signals for reliability. For example, daily overextension with intraday exhaustion signals reversal. Quantum Trading’s indicator on MT5 or NinjaTrader includes alerts for quick detection. Anna Coulling’s methodology uses this for high-probability setups.
Reversals become clearer with this method. Currency strength across timeframes, plus VPA, turns potential turns into confident trades. Quantum tools make it simple and effective.
Why Use Multiple Timeframes: Seeing Inside the Slower Candle with VPA
A single candle on a higher timeframe tells a story. But it’s just a summary. Multiple timeframes let you see inside that candle. You break it apart. This reveals the real battle between buyers and sellers. Volume price analysis (VPA) makes it clear.
The Higher Timeframe Candle as a Summary
On a daily chart, one candle covers 24 hours. It shows open, high, low, close. But what happened inside? Was volume steady? Did buyers or sellers dominate at key points? A single candle hides this detail. VPA needs more to reveal intent.
Breaking Apart with Lower Timeframes
Switch to hourly or 15-minute charts. The daily candle splits into many smaller ones. Now see the volume flow. High volume surges show conviction. Low volume periods reveal indecision. This “inside view” exposes accumulation or distribution hidden in the larger candle.
VPA Insights Inside the Candle
VPA shines here. A bullish daily candle with rising volume on hourly up moves confirms strength. But if lower timeframes show low volume highs—divergence. This warns of weakness. Professionals distributed inside the “strong” candle.
Quantum Trend Monitor on NinjaTrader or MT5 aligns across frames. It shows if lower timeframe action supports the higher one.
Practical Benefits for Traders
Multiple timeframes improve decisions:
- Better Entries: Daily uptrend—enter on lower timeframe pullback with volume support.
- Avoid Traps: Daily candle looks strong. But lower shows low volume spike—stay out.
- Understand Intent: See battles inside—accumulation for continuations, distribution for reversals.
Anna Coulling’s VPA methodology uses this for disciplined trading. Quantum tools make multi-timeframe analysis visual and reliable.
Don’t trade single candles blindly. Use multiple timeframes to see inside. VPA reveals the truth. Quantum indicators enhance clarity across charts.
By Anna Coulling