Volume Tools to Help Trade Spot FX

I’ve been referencing various volume tools in my work much more over the last several months.  Below are brief descriptions of the volume tools with some examples.

-J.S.

High Volume Levels

High volume levels are defined as the close of the bar with the highest volume in X periods.  For days and weeks, X = 50 (the highest volume in 50 days or weeks).  For hourly charts, X = 100 (highest volume in 100 hours).  High volume prices can act as support/resistance or simply a point of reference from which to establish a bias (bullish above and bearish below).

2 Bar Volume Reversals

A 2 bar volume reversal occurs when price makes a high/low on high volume and then moves in the opposite direction on high volume in the next period.  An example is below.

Australian Dollar Daily 2 Bar Volume Reversals

Volume J-Spike

A volume J-Spike is the same as a regular J-Spike (see here) except that volume for the period must be a certain percentage above average volume.  An example is below.

Euro Daily Volume J-Spikes

VWAP

Volume weighted average (VWAP) price displays the average price based on both volume and price through the trading day and starts over each day.  I prefer to use VWAP with a designated start time rather than begin the calculation new each day.  For example, I’ll often refer to VWAP for the current year or month.  This is simply the average price for the year or month weighted for volume.  I may also reference VWAP from an important high or low or an important event.  Below are some examples.  Note that I use futures prices to determine VWAP.  I do not have reliable volume figures for spot because there is no centralized exchange in spot.  Examples are below.

British Pound 2019 VWAP

Australian Dollar 2019 VWAP

New Zealand Dollar VWAP from November 2019 RBNZ

S&P Futures 2019 VWAP

Copper 2019 VWAP