Weekend-gap Strategy A great way to kick start the week of trading is to trade the weekend-gaps. When the market opens, look for price gaps which have currencies that are in opposite strength to each other. Example: AUD is -4 and USD is +6, If the market gaps up on AUD/USD, then this is a great opportunity to sell into the gap. There are 2 facts that you have to take into consideration when trading gaps. One is that gaps will always close, second is that the market can still go against the direction of the gap for several hundreds of pips before closing the gap. So its important to know what currencies are strong respective weak. This way you will know if the market will close the gap in the coming hours or not and you can start off your week of trading with a nice profit.
is it always true that gaps will be closed? I see a gap in usd/jpy at around 112 created several days ago but the price has gone to 121 now..
IvanLabrie
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I don't think they always close...but weekly close often shows gaps in FX pairs, they might show up as huge range bars though.
Price action should confirm the directional bias the gap suggests as per the author here. I wouldn't trade these blindly.
Tradinggrouptw
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It´s a fact, they always close, they can still go against the direction of the gap for hundreds, sometimes thousands of pips. But they will always close. Thats why you need to know the strength of the currency so you don't trade a gap in the wrong direction. For better understanding see this weeks setup: tradingview.com/v/Hq5HTuvx/
IvanLabrie
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Excellent Carl, I'll give your strength/weak/neutral system a try as a filter in my scans.
Tradinggrouptw
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Sounds good, looking forward to see your results ;)
Tradinggrouptw
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Yes, gaps always gets closed in forex. "second is that the market can still go against the direction of the gap for several hundreds of pips before closing the gap." USD still strong and JPY still weak. We don't want be trading gaps like these, since USD is strong and JPY weak. You can read more about it and get a better understanding at at this weeks setup: tradingview.com/v/Hq5HTuvx/
Tradinggrouptw
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Yes, gaps always gets closed in forex. "second is that the market can still go against the direction of the gap for several hundreds of pips before closing the gap." USD still strong and JPY still weak. We don't want be trading gaps like these, since USD is strong and JPY weak. You can read more about it and get a better understanding at at this weeks setup: tradingview.com/v/Hq5HTuvx/