part0171

And you may think it odd I have added these at the end given all the other timeframes are in chronological order, but there is a reason. I wanted to include them at the end as they do require a slightly different mindset when using volume price analysis. Many traders say you cannot use this timeframe as the volume profiles are always the same. In other words high in London and the US and low in Asia. In a sense this is true, and as you saw earlier, we also have similar issues when considering the hourly charts, but I hope I have convinced you the methodology works perfectly well on this timeframe.

When moving to the four hour chart we need to consider the comparative aspects of volume in more detail, and in particular compare one session to another, but of the same period.

The four hour chart is also an interesting one as we can break the 24 hour trading day up into either four hour or eight hour segments. So six sessions of four hours each. It’s not perfect, but it does give a ‘framework’ to our analysis, and helps to divide the chart into the various timezones and liquidity sessions. And as I hope you will see, the four hour chart still has something to offer us as volume traders.

The key take away here is to remember there will generally be a lag from one session over into the next. So what happens in the London session on one bar, may follow through into the London session the following day or two or more days later. It is almost as though there is a delayed reaction. When you think about this logically this is no great surprise as the focus constantly shifts from one currency to another as the sessions move with the 24 hour clock. So focus on the euro and the British pound will be very high in London, less so in the US session, and of very little interest in Asia and the Far East. So this ‘cyclical’ focus is really what the four hour chart is constantly describing, which is why I left it until the end of the book. It really does break the market up into the session phases of local price action, which is why you will see the ‘delayed reaction’ effect coming into play here.