breaches. sessions. currency strength
Welcome to the part 2 of your Jedi training to become a forex trader. In this chapter, we are gonna be discussing how you identify the strength of the currency pair. Do take note, all charts used for this chapter is based on M3 and M15.
UNDERSTAND SESSIONS AND MARKING THEM UP
Now, before we proceed, there is something we need to understand about the Forex Market. There are three mini sessions in a major session (01 day) in the forex market. They are commonly known as the Asia Session, London Session and New York Session.
Under Asia Session, there is a Sydney Session and Toyko Session. When Asia Session closes, London Opens and halfway in London Session, New York opens. When New York Closes, it is considered as one full session. And Asia (Sydney) opens and this is a new session.
To make your life slightly easier while using Tradingview, load an indicator known as Sessions By Aurocks_AIF.
HIGHEST AND LOWEST POINT OF SESSION
Do understand the power of the currency pair you are trading with, you need to understand the strength of the currency. One thing you have to understand, traders from Asia, from London and New York, they do have different trading patterns. It is quite important to have a general idea of how each session is transiting from one to another.
From the below example, you can see that during the London Session, there is a mild break down to the South and broke Asian Lowest Point, but it hardly travel down.
Such momentum are generally weak.
combined news and breakout
However, in the previous chapter on learning about Fundamentals, you can combined that knowledge with this breakout theory to truly understand the strength of a strong momentum due to news.
From the above example, there was a bad news release on CNY that it affected NZD and AUD (Why does CNY affects AUD NZD) and it was so strong, that it broke US Session Lowest Point. And this went out to the new Asia Session and again it went down south and broke New York Session as well.
So this is why you need to keep track Fundamentals , understanding sessions, and the breaking of sessions.
Breaking of previous session that is caused by news movement is one of the strongest movement, that can last till the next session and probably the next day.
Memorize this chant “Previous Session Break + News = Power“. And if you see “Previous Day Break + Previous Session Break + News = OM MONEY OM“. Go meditate on this.
But DO NOT trade based on just this information. This is simple a guide and do not trade with only two parts of the information.
tools being used
Indicators Used in all Charts : Sessions by Aurocks_AIF
Website to Tell you The Sessions : Forex Market Hours