VPA Chart Examples

In this video we show you how VPA can help to identify those trap moves where the insiders and market makers are simply moving the market rapidly, but not participating. Volume reveals this clear anomaly and this is a great example from the NZD/USD 5 minute chart.

Volume price analysis reveals the truth behind the price action, and the trap move is one where lack of particpation is seen simply and clearly.

In this short video we add the volatility indicator which helps to confirm the VPA signal of a lack of participation, with the wide spread up candle on average volume. Volatility is asociated with the insiders and market makers and what often occurs here is the market jumps on volatility with the price action then reversing inside the spread of the candle and often reversing, leaving traders trapped in weak positions. The volatiltiy indicator helps to confirm this and is triggered when price action moves outside the average true range in that timeframe and pair. It’s a classic trap and one which the volatility indicator helps to highlight giving an early warning of a possible trap being set.

Congestion phases are one of the most important areas on a chart, and here we take a look at a slower timeframe with the 30m chart for the USD/CHF. The dynamic support and resistance indicator then highlights and details all the areas of potential support and resistance, whether less strong, or deeper as shown with the solid lines on the indicator.

In this video we focus once again on the importance of congestion phases, and in particular the relationship between support and resistance and the associated volume which then builds in these regions.

In this video we explore the importance of the congestion phase as it builds on the 30 minute chart for the USD/CHF and the relationship to the subsequent support and resistance regions which duly build, with volume price analysis defining likely direction of the future move and breakway from this region.

In this video once again it is volatility and the news which takes centre stage and here we see the impact of volume as a piece of fundamental data is relased to the market and the conseqent dramatic increase in both volume and voaltility. The volume reveals the extent of the buying and selling the trap moves which duly follow and signaled with the volatility indicator. New releases are one of many opporunties for the market makers to trap and trick with the particpation or lack of participation revealed through the prism of volume.

In this video we consider how volume price analysis helps us to anticipate future market direction, but more importantly how it removes that fear when we have a strong position in the market, and the price action then starts to reverse against us. This is when emotion and panic starts to build, yet with volume price analysis, this warns us in advance and so we are prepared mentally, and can manage our emptions better as we are not surprised by what follows. And this is the case here with two candles on high volume, with the first a welcome one and the second, less so! But at least we have advance warning and so are not surprised when what we expect to happen……actually does! Then we can make and take more logical decisions and not those generally based on emotion.

In this video at the live edge we see a very clear signal on the GBP/JPY chart with a surge in volume on a classic hammer and following the price waterfall, so strong buying. But, it’s so easy to jump in too quickly on such a good signal. Patience is always required. V shaped rallies do happen where the market or pair reverses immediately but these are rare. The more usual price action is as we see here with congestion following before the reversal in the primary trend develops. Whilst this is a one minute chart, exactly the same principles apply to any other timeframe.

In this video we take a look at a fascinating chart for cable on the ten minute timeframe, and which has several takeaway lessons. First this shows the dramatic changes in volume and activity across the various timeframes and using the NinjaTrader platform. Second we see the dangers of the crossover periods as one market joins another, and the reversals which are so common during these periods of the trading day. London is the classic and as you will see from the video a nice trap was created during the European open and promptly reversed into the extended bearish trend thereafter. Finally on this chart we see an example of a V shaped rally – yes they do happen but not that often. Rest assured the price action is more likely to develop into consolidation, but on this occasion was also helped by fundamental news which arrives 30 minutes after the open and so helps to drive USD sentiment shortly after.

Breakout trading is an extremely popular tactic when trading, but it is often one which receives a bad press. The reason for this is very simple, as breakout moves are often associated with ‘fakeout’ moves. In other words a trap move with the price action then reverting back into the congestion phase once more. Breakout traders who do not use volume then suggest this is not a valid approach to trading, and that’s the reason they struggle. They do not apply volume. Volume confirms whether a breakout is genuine or not as it reveals whether the indsiders are market makers are particpating or not. If they are then you can join the move with confidence. If not, then you stay out and wait. It’s that simple!

In this lesson we consider the daily chart for the AUD/JPY which offers a complete view of the price cycle from a primary bullish trend higher into the congestion phase, and development of the bearish primary trend lower. The key area is the congestion phase which develops and how the constant testing and retesting create the levels of resistance above and support below. Whether you choose to take this as a reversal trade and enter early, or wait for the development of the trend and enter later is a personal decision and only one you can make.

Alternatively you can enter on the breakout. All are perfectly valid, and the chart really describes the price action perfectly and the reversal from a pimary move higher to a primary move lower.

In a previous video we looked at a reveral on the daily chart, and here we consider the same principles applied to a 15 minute timeframe on cable. As we always say, VPA can be applied to any chart or timeframe, and this is just such an example, with a congestion phase, a bullish trend developing, into the congestion phase, and then the reversal into the bearish trend, with support and resistance then playing a key role. Once again you will have choices to make – do you get in early and wait for the breakout, do you indeed trade on the breakout, or do you prefer to wait and then jump on the trend once the ‘train is in motion and underway’?

Only a decision you can make but VPA delivers all the signals and of course in addition you would be considering this in multiple timeframes along with all your Quantum Trading indicators to guide and help you.

This is one of my favourite charts and it would be hard to find a better advert for volume price analysis. The GBP/JPY is the most volatile of all pairs and so is avoided by many traders. But just like breakout trading where volume comes to our assistance, so it does here and really helps to build confidence in trading the ‘dragon’ which is a name that is well deserved. This is not a recommendation to trade this pair, but this example simply reinforces the power of volume price analysis. In this case we have a ‘stepped’ bullish trend which took the pair 1000 pips higher over a matter of a few days, with congestion phases developing, and then breakouts taking the pair higher and suppported with excellent volume before finally arriving at an extended congestion phase which was in fact the precursor to a reversal to a bearish trend of some magnitude thereafter. But again, the descent would have been confirmed with volume once more!

In this example using the USD/JPY and the three minute timeframe on the MT5 platform we deconstruct the bearish trend, and explain the importance of the candles which appear in the secondary reversals higher. These candles are key for several reasons. First, they help to signal clear and low risk entry positions if you are not already in the trend lower. Second and just as important they help you to maintain an exisiting position and hold this through the inevitable reversals and pullbacks which are part and parcel of any trend. In the downtrend they are hugely important and the candles are denoted with the deep wicks to the upper body, and sending a strong signal of further weakness to follow which is why they are so powerful, and even more so when more that one appear or they appear in groups with other candles. Volume of course also plays a part and this can be high or low. High volume signals heavy selling into weakness, whilst low volume signals lack of interest so the volume on these candles can be either high or average to low. It is the price action which is paramount in these areas of the chart and within the secondary trend reversal.

The most difficult thing to do in trading is to stay in a trend to maximise profits. No market ever moves up or down in a straight line and when the primary trend develops a reversal or pullback, these are the points at which emotions rise and the desire to close out and take profits off the table is very strong. Unfortunately closing out early adds to the problems of the maths of trading, which is based on small losses and outweighed by larger profits which have to be extracted when a trend develops. VPA is an extremely powerful tool in this respect and helps to identify whether the pullback is merely a secondary trend and therefore one where the primary trend will be re-established for further profit potential.

Of course in addition you also have all the Quantum tools and indicators to help further such as the Trend monitor and the Trends, but VPA helps to reinforce the analysis and also removes emotion as you move to a logical analysis of the chart, rather than one based on emotion.

In this video we look at a wonderful example which pulls it all together in terms in how to identify a secondary phase of price action using VPA. In this example we start with a bullish primary trend and note how the volume and associated price action in the reversals helps us to conclude whether we are seeing a full blown reversal or simply a secondary reversal which is confirmed by the associated volume profile. What we also have here is the complete cycle where the bullish primary trend does indeed come to an end and is then replaced with a bearish primary trend, and once again VPA helps us to stay in this trend also.

In this video we look at a simple example of supply and demand and in this case distribution on a fast timeframe. Distribution and accumulation phases of price action occur in all timeframes and are of course closely associated with support and resistance, as these regions are generally characterised by sideways price action which is often spiky and volatile and indicative of the effort required to buy and sell when a market is weak and about to reverse. In addition, when considering supply and demand areas, we also have other factors to consider such as the order boards, option expiries, and volume associated regions which we see on such indicators as the volume point of control. All play their part in defining these areas which can be seen from the 1 minute to the 1 month chart, and signifying those areas where the market makers and insiders are selling when everyone is buying and buying when everyone esle is selling.

In this video we explore the supply and demand relationship when viewed as accumulation. In this case the market makers and insiders are moving in to buy following the price waterfall, and so reverse the sentiment from the bearish to bullish. Supply and demand in the forex market has many different aspects, and not least the order boards, support and resistance, option experies and the constant movement from overbought to oversold for both curencies and currency pairs which all play a part. The price action associated with both accumulation and distribution phases is generally characterised with volatility, spiky candles and whipsaw action as the market makers shake out the market before reversing direction.

In this video we focus on Wyckoff’s second law and the concept of time. Cause and effect simply means if the cause is large then the effect should be equally large. In other words the longer a market remains in congestion then the more developed should be the trend once it begins. And ofcourse in these phases of price action we should see volumes fall and price action narrow with the consequent development of support and resistance areas.

In this video we explore another example of Wyckoff’s second law of cause and effect on a faster timeframe, yet the same principles apply. In this example we also show the characteristics of how the price action and volume during a congestion phase varies to that associated with climactic price action of accumulation and distribution phases where the price action is volatile and spiky. Again with cause and effect it is time which is important, and the greater the cause or time, then the greater the effect, or result.

So if the time is short, relative to the timeframe, then any resultant trend is unlikely to go far. If the time is long, relative to the timeframe, then the resultant trend is likely to run further.

This law is the foundation stone of all Wycoffian theory, and is summed up as the law of effort and result. Put simply, the effort that is put in should result in a result which is agreement with this effort. In the world of volume price analysis this equates to volume and price which is either in agreement or is in disagreement. From this and an analysis of the candle and its associated volume we can then draw conclusions as to whether this is market maker buying or selling, and so anticipate future market direction.

In this video we start with some very simple examples on the 30 minute chart for the EUR/USD and focus primarily on the up candles, using one as a benchmark candle for our analysis.

In this video we study some further simple examples of Wyckoff’s 3rd law and on three candles in particular. The first is at the bottom of a bearish trend where we see the highest volume of the session arrive. This is followed by an up candle on good volume, and finally our third candle which really sets the alarm bells ringing loud and clear as the trap is set and sprung. Traders fall into these traps all day long. They appear in all timeframes and often at session crossovers and also at and just before news releases. VPA is based on the fundamental principle of following the market makers as they buy and sell and in this example we see clearly as they set the trap.

Volume price analysis reveals the truth behind the price action, and never more so than in this video where it could not be clearer.

One of the lessons we all have to learn as volume price analysis traders, is the patience required once a strong signal appears. In this example the early warning signal is extreme volume which heralds some weakness in the bullish trend higher. This is not an immediate signal to sell, but a sign that the market makers are struggling here, driving the market higher and into a market that is becoming unresponsive to higher prices. The analogy here is the car moving up an icy hill, with more power applied to the accelerator simply resulting in the wheels spinning ever faster. So the early warning appears first, and then this is followed by further confirming signals denoted with the deep wicks to the upper bodies of several candles which then follow on good volume, with the pair finally rolling over and into a steep bearish trend in due course.

The take away message here is patience – be patient and take note of these early warning signals and do not expect the market to react instantly. It takes time to ’empty the warehouse’, and once done, the next phase of the campaign then begins.

In this video we highlight the need for patience and even more so when such a strong signal appears. The temptation here is to jump straight in and even more so when the signal is as clear as it was in this example. So when these appear, wait and prepare for the move to develop. Yes, on occasion the market will reverse off one candle or signal, but this is not the norm and as a rule congestion and consolidation will follow first, before any reversal develops.

In this video we step back a little and consider the chart from a big picture perspective, so moving away from the single candle and single volume bar and considering groups of candles and volume. And in this example we have a nice trend lower which is confirmed and supported with rising volume which reinforces the bearish sentiment.

Remember markets require effort to rise as well as fall and this is an excellent example of this basic concept which is important to grasp. Notice also in the rallies into the secondary trend how the volume falls, and confirms the dominance of the bearish sentiment for the time being.

Finally we explain a more nuanced aspect which is where price revisits a previous area which has seen high selling pressure, and in this case you can see how the selling volumes reduce dramatically giving us a strong signal this trend is possible reaching a pause point or even coming to an end.

When considering the daily timeframe or slower timeframes one always has to be aware of the reasons volume may vary on these charts. For instance seasonality is one reason, holiday periods is another and finally of course we have the session periods themselves. So always be aware of this before jumping into any analysis of the slower timeframes.