Sunday, February 8, 2015

US open compared to London open

I was asked if this method is also applicable to the US open and to give some suggestions on trading at that time.

A search of this blog for "avoid weak counter trend candles" will show numerous posts with charts that you can have a look at.

If you are trading the 1 hr charts you can be looking for "good" candles that revert to the days trend or where price respects a support/resistance level for hours.

Good candles likely to fall into the engulfing, large wick rejecting a move or 3 bar reversal category (for sells a close below the previous 2 candle closes where 1 must have been a positive close and for buys a close above the previous 2 candle closes where 1 must have been a negative close). Due to the 3 bar reversal definition this implies a true counter trend move and a close back into trend.

If you are trading smaller time frames you could be looking at higher low, lower high entries following the close of a 1hr candle.

Nothing works all the time and the big US news events can be very volatile but these charts show several examples of good candles following through and of course those that don't. Often with a failure the candles high/low is respected so trading a few pips beyond the range would keep you out of a lot of failed trades.

At the moment I am looking at lower time frames for entry.




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