Those of you who have studied the 10 best forex strategies would know by now that my recommendation is to select several of the strategies in combination rather than settling on one only, although that’s fine if it works for you. The following is a quick discussion of a single morning’s trading here in Asia that illustrates many of the concepts involved in the 10 strategies.
The chart above shows the AUDUSD (5 minute timeframe). At the left of the chart the grey area depicts the last of the overnight northern hemisphere trading. You can see that liquidity/volatility had pretty much dried up, and that trading for the most part had tapered off. The blue “1” shows where price had come down to test the Round Number (indicated by the grey dotted line). Note how price respected this round number all the way across to the beginning of the Asian session depicted by the blue area of the graph.
The vertical dotted line at the start of the blue area represents 9 AM Australian Eastern Standard Time (Sydney/Melbourne). Note how price had started to show more volatility just prior to this. This was caused by the release of important data in New Zealand, whose currency somewhat equates to the Aussie, and whose news announcements can certainly affect the AUDUSD.
The blue 2 represents the Tokyo open, i.e. 9 AM AEST. Price was on a beautiful run from here, but it would have been hard to catch it and certainly risky around the news announcement.
The blue 3 represents the signal candle of a shooting star pattern. If there had been other indications around this price level, for example another round number or significant pivot level, this bearish hammer or rejection bar candlestick could have represented a good entry on its own.
The blue 4 represents an area where price paused in its down move, at the top of the old fractal that had preceded the Asian session.
The blue 5 represents two possible Bladerunner Crossover trades, although I would not have taken either given the fact of the long fractal at the left of the graph that had failed to penetrate the round number and hold below it.
The blue 6 shows price forming another fractal after bouncing at the round number once more. This is also around the time when Tokyo opened, and the Tokyo open is when liquidity usually surges in Asia.
The blue 7 shows price having crossed to the upside of the polarity indicator (the yellow swathe) and so we can start looking for Bladerunner Crossovers again.
The blue 8 shows the first of two possible Bladerunner Crossover entries, after a strong hammer candle has rejected from the polarity indicator and the old level of resistance formed by the top of the preceding Dominant Fractal at the left.
The blue 9 shows the second possible Bladerunner Crossover. Either of these trades should have paid had you entered them.
As you can see, it’s not necessary to just settle on one strategy and only look for its signals. As you come to understand more and more about the market, the connections between the fundamentals driving price behaviour and the technical signs of such behaviour become more clear, offering a variety of opportunities.