How to Spot Reversals Using Volume and Support/Resistance Zones (Day Trading Strategy) — Transcript

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1. 0:00This person asked, "Can you make a video
2. 0:02on how to determine reversals using
3. 0:03support and resistance and volume and
4. 0:06volatility?" By the way, nice video,
5. 0:09XDS, what's up? Let's jump onto the
6. 0:12charts. I'm going to tell you what to
7. 0:13look for. Because you didn't specify a
8. 0:16time frame, I'm going to look at the
9. 0:17daily and the hourly. These are the
10. 0:20levels that most traders are going to be
11. 0:22looking for. If you're swing trading,
12. 0:24you're looking for daily support and
13. 0:25resistance areas. And if you're more
14. 0:28scalping, intraday trading, day trading,
15. 0:30you're going to be looking at the hourly
16. 0:32because those are going to be the higher
17. 0:34pivot points versus looking at pivot
18. 0:36points on, I don't know, the 5m minute.
19. 0:38So right here we have Euro USD on the
20. 0:40daily time frame. Now on the daily, you
21. 0:43can see these huge rejection points at
22. 0:45which the price completely tanked from
23. 0:48or surged from. Now, when you're marking
24. 0:51up support and resistance zones, all you
25. 0:53have to do is find areas where the price
26. 0:56had a dramatic decrease or a dramatic
27. 0:58increase from, and that is your level.
28. 1:01It's very, very simple. When it comes to
29. 1:03what you should be looking for in these
30. 1:06areas, you're looking for a candle
31. 1:08formation. First and foremost, I really
32. 1:10like dogee candles. Like that right
33. 1:13there is a dogee candle. This one is
34. 1:16dogee-esque. perfect dogee where the
35. 1:19open and close is exactly the same with
36. 1:21a wick on the top and the bottom. This
37. 1:23one is very very similar. So, what
38. 1:25you're looking for in these areas, this
39. 1:28may sound stupid, but volume, let me put
40. 1:32it a different way. If volume runs up
41. 1:36very, very aggressively and then just
42. 1:38stops, that means that there's a loss of
43. 1:40interest completely. And all of the
44. 1:42people that bought into it was like hype
45. 1:45and retail. So, I've zoomed this zone
46. 1:48into the hourly so you can see what I'm
47. 1:50talking about. Because on the daily,
48. 1:51because every day there's a specific
49. 1:54amount of volume and that doesn't change
50. 1:55very much, the volume on the daily
51. 1:58doesn't really give you that much of an
52. 1:59idea. But if you dive down to the
53. 2:01hourly, you can see exactly what's going
54. 2:03on here. So, right here is where that
55. 2:05dogee candle was. As you can see, the
56. 2:07volume spiked into this area and then
57. 2:10completely died off, which means no
58. 2:12interest in this area. Volume spiked in
59. 2:14the area, but price did nothing. Volume
60. 2:18spiked again and price did nothing. Then
61. 2:21as it started to break down and out of
62. 2:24that zone, volume spiked a little bit.
63. 2:27It completely broke and closed out of
64. 2:29the zone. Volume spiked a lot. Once it
65. 2:33gets into these areas, you want to watch
66. 2:35it. If it's flatlining yet there's high
67. 2:38spikes of volume, there's no interest in
68. 2:40the price going higher. Once it breaks
69. 2:42below and the volume spikes up, you have
70. 2:45interest in selling. So again, this is
71. 2:48on the daily. This is where it first
72. 2:50rejected that zone. These are the next
73. 2:52two areas where it rejected the zone.
74. 2:55This is called a double top. Now, if you
75. 2:58don't want to use volume in these types
76. 3:00of scenarios with double tops, that's
77. 3:02completely fine. With double tops, I
78. 3:03like to use the RSI. So, it's just an
79. 3:06added confluence. Looking at the RSI, we
80. 3:08had the one top here. Price was
81. 3:11overbought, rejected that area again. It
82. 3:14was within the 7030 range. So, two equal
83. 3:18tops yet showing a divergence in the
84. 3:21RSI. This is weakness in the price.
85. 3:24Usually a sign of reversal. But let's
86. 3:26look at volume at these two specific
87. 3:28levels. We had a massive spike in volume
88. 3:31coming into the zone and then nothing.
89. 3:35Zero interest. Volume means interest.
90. 3:38Now here there was no volume runup. It's
91. 3:43just been flat volume the entire time
92. 3:45which means to me again no interest.
93. 3:48Then once we start rejecting down we
94. 3:52start seeing the volume increase as the
95. 3:54price drops increase in interest. Now
96. 3:57that is for swing trading looking at big
97. 4:00support and resistance zones. But if
98. 4:02you're more intraday trading you want to
99. 4:03look at the smaller moves in between. In
100. 4:06the higher time frame, this is going to
101. 4:08look like a trend continuation. But on
102. 4:10the smaller time frame like the 15
103. 4:12minute and the five, this is going to
104. 4:14look like a reversal. So we have this
105. 4:16zone drawn up here where we had some
106. 4:18rejections and a spike up. Rejection and
107. 4:21a spike up. Rejection and a spike up.
108. 4:24These are the areas that you want to
109. 4:25focus on. Price will go back to them
110. 4:27until it's ready to leave for good. And
111. 4:29always in these areas there will be a
112. 4:32spike in selling volume and then the
113. 4:34interest will just completely die.
114. 4:36People will no longer be interested in
115. 4:38selling at this area again. Huge volume
116. 4:42spike of selling pressure into it and
117. 4:45then nothing. Again huge volume spike
118. 4:48went below the zone and zero interest.
119. 4:52Then you start seeing the price push up
120. 4:54and an increase in volume, specifically
121. 4:57in buy volume from this area. A huge
122. 5:00spike up into a zone that just stops and
123. 5:03rejects and there's zero interest. The
124. 5:06volume pretty much dies after that. It's
125. 5:08not interested in going up higher.
126. 5:10Massive selling volume into this zone
127. 5:12and then no interest. a spike in selling
128. 5:15volume, another spike in selling volume,
129. 5:18and then no interest to continue the
130. 5:21price further down. That means the
131. 5:23sellers are exhausted at that point.
132. 5:25There's no need for them to continue to
133. 5:26push the price down, and that's when the
134. 5:29buyers have an opportunity to take over.
135. 5:31Even if it's a little bit of volume,
136. 5:33it's still going to push the price up.
137. 5:35Now, when it comes to looking at the
138. 5:36volatility, the volatility index, it's
139. 5:39more used for indices versus if you're
140. 5:43looking at EuroUSD or any other currency
141. 5:45pair. And this is how it correlates with
142. 5:47the volume. You'll see a massive
143. 5:49increase in volume. Basically, as it
144. 5:52loses its volume, the VIX will
145. 5:55completely stop moving. So, if you look
146. 5:57right here, we had a huge runup. And at
147. 6:00the absolute top right here, the volume
148. 6:03was very, very low. Again, huge spike in
149. 6:05volume, bottom, no volume. So, the rule
150. 6:08of thumb when you're looking at areas of
151. 6:11support and resistance and volume and
152. 6:13volatility is when it hits that area,
153. 6:16you want to see a spike up into the area
154. 6:19and then the volume just die in
155. 6:22comparison. Those are the areas that you
156. 6:24want to focus on. If you're seeing a
157. 6:26double bottom or a rejection off of a
158. 6:28support and resistance zone, see if the
159. 6:30volume increased into the zone and then
160. 6:32stopped when it got to that zone. That's
161. 6:34when you want to get in on your buy or
162. 6:36sell order. Now, if you want to learn
163. 6:38something specific about day trading,
164. 6:40leave it in the comment section down
165. 6:42below and I'll do the exact same thing I
166. 6:44did with this video and your comment. A
167. 6:46special thanks to all the members of
168. 6:47this YouTube channel. I appreciate you
169. 6:49more than you know and I read your
170. 6:51comments first. Thanks so much for
171. 6:52watching and we will see you in the next