Understanding volume in both up and down moves

Question

Hello Mrs. Anna… Thank you for answering my questions about FX volume. I know you are very busy so I apologize for bothering you. Am just trying to understand if your VPA really applies to forex as shown on an MT4 chart. Attached is an example of part of a 5 minute chart that shows big moves volume up while price is a big move down. I see this many times. I do not understand why the correlation seems backwards. Any suggestions appreciated. Still reading your books

Answer

Hi – Many thanks for your email and screenshot. The price action and volume you are seeing is just what you would expect to see in a valid move. Volume is required, not only if the price is to move up, but also down because it takes just as much effort for a market to fall as it does to rise. This is explained in great detail in the book.

With regard to the volume bars themselves. May I suggest you have these as one colour – white, magenta etc & not displayed as green & red. On MT4 the significance of the green/red can be misleading & the colours should not be interpreted with the candle above. They are simply showing whether the current bar is higher or lower than the previous. What I also suggest is that you also look at the 15 min chart for a view as to the likely strength of the move you are seeing. Using multiple timeframes in trading is one of the cornerstones of any trading strategy, and can be applied not only to the charts themselves but also to any indicators. If you have come along to any of my forex training rooms you will have seen me use the currency strength indicator in this way. Hope the above helps. Kind regards – Anna

About Anna 1027 Articles
Hi – my name is Anna Coulling and I am a full time currency, commodities and equities trader. I have been involved in both trading and investing for over fifteen years and have traded many different financial instruments, from options and futures to stocks and commodities. I write and publish articles ( mostly for free ) for UK and international publications on a wide variety of financial issues, and in particular I enjoy helping others learn how to invest and trade.

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