Identifying short-term trends at the open and close of any market is one of the best ways tocapture a move. The stock market often tips its hand to reveal the day’s trend within thefirst hour of trading, and entering in the direction of an initial breakout can be a good idea.However, the currency markets are a different story, because currency pairs trade non-stop around the globe from Sunday evening to Friday afternoon.
Currency volume and volatility can spike any time, because the markets are constantly changing time zones and one-third of all traders are asleep at any given moment. It is nearly impossible to track money flows and never miss a significant trend or news event. So how can currency traders keep up with this 24-hour market? One answer is to find out when each currency pair tends to trend during the day and focus on those periods.
This strategy is based on historical trends in hourly bars in the Eurocurrency futures(EC). Not surprisingly, the most significant price moves appear when one regional center (Asia, Europe, or U.S.) closes its trading session and another one opens. The historical patterns can save time: Instead of watching the markets all day, you can focus on these transitional periods offering the best odds of success.
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