A nice congestion phase building on the 5m chart for the GBP/JPY and one which introduces several elements of volume price analysis. First we have support and resistance with a strong region of resistance building with the red dashed line. This is on the accumulation and distribution indicator which displays graphically the strength of such regions. In other words the thicker the line, the stronger the region, so a strong ceiling of resistance building at 129.75. In addition, we are also trading at the volume point of control at 129.52. This is the fulcrum of the market at present as there is no bullish or bearish bias. In other words, the market is in price agreement and is also where we have the heaviest concentration of volume. The key now is to wait for the breakaway from this region which will come – it’s a question of being patient and waiting. And on the move away we then move to consider the volume associated with the breakout which will confirm if the move is genuine. And finally, to help us once the breakaway begins, we have a low volume node both above and below on the volume point of control histogram which will mean any price action here will move swiftly through these levels.
And here is what happened a little later! A nice break from this congestion area on good volume and a swift move through the low volume node on the volume point of control histogram. A nice comfortable trade riding the dragon and all that was required was patience and knowledge of volume price analysis, supported by our Quantum Trading tools and indicators.
By Anna Coulling
Charts from NinjaTrader and indicators from Quantum Trading
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