Taking Advantage From Forex Market Cycle
Forex Market moves in a fairly predictable cycle on a daily basis. It is as your local traffic, where you’ll have traffic jam during certain hours in a certain direction flow, and other hours at the opposite direction.
If we can predict market direction during this cycle, we will have an advantage that most traders don’t have.
It is like having local traffic radio on while driving, letting you know where are the accidents and delays, so that you can choose the least travelled road.
Market generally moves in the following manner:
02:00pm ~ 09:00pm PST Ranged market.
09:00pm ~ 11:00am PST Market prepares to breakout prior to London open
11:00pm ~ 12:15am PST Market reverses as Asian traders take profits
12:15am ~ 02:00am PST Market Trend Re-Establish in the direction of the Asian session
02:00am ~ 04:00am PST Market Trend Continuation
04:00am ~ 05:15am PST Market reverses as we see some profit taking
05:15am ~ 06:00am PST Market Trend Re-Establish
06:00am ~ 06:30am PST Market Minor Reversal
06:30am ~ 08:30am PST Market Trend Re-Establish and Continuation
08:30am ~ 09:30am PST Market Minor Reversal and profit taking
09:30am ~ 02:00pm PST Market Ranged Continuation
You can backtest this hours. Watch the price movement during those hours.
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Asian FX market wrap: quiet session consolidating Friday’s falls
Australian TD-MI measure of Australian inflation +2.6% YoY Noted RBA watcher thinks rate hike not a certainty Australian job ads -8% MoM, house price index +13.6% YoY Hometrack survey of UK house prices -0.8% YoY China manufacturing PMI in January down 0.8 to 55.6 Latest market positioning research suggests that EUR shorts at 16 month …
Excerpt from:
Asian FX market wrap: quiet session consolidating Friday’s falls
Risk aversion rising; Watch AUD
Risk aversion is raising all around as investors flock to fixed income and shed riskier assets.
Read the rest here:
Risk aversion rising; Watch AUD
Dollar Rally Ends
The US Dollar Index retreated below support at 76, warning of a test of 75. Failure of 75 would offer a target of 74*. Recovery above 76 is unlikely, but would indicate a test of 77.50. In the long term, the primary down-trend is likely to test the 2008 low of 71.50, while breakout above 77.50 would signal that the down-trend has ended.
US Dollar Index
* Target calculation: 75 – ( 76 – 75 ) = 74 Euro The euro respected its lower trend channel, indicating another primary advance with a target of $1.52. Reversal below $1.47 is unlikely, but would warn of a secondary correction.
Euro US Dollar
* Target calculation: 1.50 + ( 1.50 – 1.48 ) = 1.52 Pound Sterling The pound is ranging between $1.60 and $1.66, indicating active management by the two central banks. An ascending triangle, however, at the upper border indicates buying pressure. Breakout above $1.66 would offer a target of $1.74*. Reversal below $1.64 is less likely, but would signal a test of support at $1.60.
Pound Sterling
* Target calculation: 1.66 + ( 1.66 – 1.58 ) = 1.74
Japanese Yen
The dollar is testing support at ¥90. Respect of support indicates a rally to test the upper trend channel. Reversal below ¥90 would indicate a decline to the December 2008 low of ¥87.
Australian Dollar
The Aussie dollar found support between $0.89 and $0.90. Expect an advance with a target of $0.96*. Reversal below $0.89 is unlikely, but would warn of a secondary correction. Australian Dollar US Dollar
* Target calculation: 0.93 + ( 0.93 – 0.90 ) = 0.96
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