In this article we’re going to be covering what daily and weekly market cycles and session timings are so you can get an idea of all of the different ways the forex markets can move on any given day. This particular resource is for those of you who are aspiring forex day traders, and for those of you who are already consistently profitable, but want to improve upon their edge.
It should be noted that this is not a substitute for using proper technical analysis. The key to accurately analyzing any market is to approach it holistically and in a way that takes several factors into account so you can determine what direction the market is most likely to move in any given session that you’re looking to trade.
Does swing structure fail sometimes? Yes. Does liquidity always get swept right away? Nope. Does a level of supply or demand have a 100% chance of holding? Never! Will the market always fit these market cycle models we’re going to show you? Nope. However, having maps that outline all of the potential scenarios that can play out in your arsenal of tools as a trader will drastically improve your ability to act quickly when the market sets up, or to quickly pivot when your bias is wrong.
Remember, without a good quality forex trading strategy, proper fx risk management, and a sound trading psychology, these concepts along aren’t going to make a consistently profitable trader. Whether you trade using the Phantom Trading methodology or have your own strategy (retail or a supply and demand strategy), the concepts will help with getting better at finding your intraday bias, and help you pivot quickly if you’re wrong initially so you can catch more moves in the market!
Before we get into the nitty gritty, let’s quickly cover the different forex sessions so we understand when and where we can expect volatility and movement in the forex markets.
Watch Our Video on Intraday Market Cycles Here
The Three Main Forex Sessions
When trading FX or Indicies there are three primary sessions that happen everyday. We all know that the FX market is open 24 hours / 5 days a week, but within the hours the markets are open, there are spikes and lulls in volume and volatility that we should be aware of. Whether you like trading markets that are less volatile (Asia Session), or ones that have a lot of volume and movement (London and New York Session)… don’t worry we’ll be covering all of it.
First off we have Asia session. The reason we’re starting with this one is because it’s the very first session to start off the trading week with Sundays opening at 8:00AM in Tokyo and 9:00AM in Sydney. This is also sometimes referred to when APAC (Asia-Pacific) opens. This session is typically met with very rangey price action with the exception of certain APAC pairs having volatility on occasion during the Asia session. Aside from that, there normally isn’t a lot of volume or manipulation from BFIs (banks and financial institutions) at this time, leading to very natural and slow-moving price action.
Asia Range Liquidity
One thing you may notice if you use a session range indicator is that liquidity tends to naturally get built during the asia session usually due to the fact that it likes to range, and where there are ranges, there is liquidity built above and below.
So why is any of this relevant? If you trade the London session, it’s important to be aware of where liquidity is built and likely to get swept at Frankfurt or London open.
Moving on we have London session which is a favourite among those who reside in the UK and Europe (big surprise, I know) – but this doesn’t stop North and South Americans from trading the session despite it being 3:00AM EST when London session actually opens. Why do people love London session? Asia usually builds liquidity within or around its range and volatility consistently jumps when Frankfurt or London open hits as a huge volume of orders flood into the market. This makes for ideal trade conditions if you’re looking to capitalize on big intraday moves.
Frankfurt opens at 8:00AM CET (Central European Time) or 7:00AM GMT (an hour before London open), and while it doesn’t always have a volatile move, you may notice that on some days it sweeps liquidity in Asia session, starts moving in one direction, and London continues that move for the entire session until NY session opens. This is a bit of a tough session to trade as it usually requires that you take riskier entries in order to get in before the move happens.
Next we have London open, which officially starts at 8:00AM GMT if it’s in the winter, or 8:00AM BST if it’s in the summer. London session is characterized by having a ton of volatility at it’s open all the way to about 2-3 hours into the session at which point volatility slows as traders and financial institutions alike go for lunch in the UK. The extreme volatility you’ll be met with in this session is great if you trade major pairs or European indices, stocks or equities because when London session moves, it really moves!
At around 11:00AM-12:00PM (noon) you’ll typically see price action settle down for a bit as the main moves for London session have been exhausted. Now, this doesn’t mean that London lull doesn’t sometimes have volatility (even consistently for a weeks or months at a time in our experience), but typically you can expect volatility at open and a clear drop in volume and movement from about 3 hours into London session, all the way up until about an hour before or after New York Open. Most traders who trade both sessions take a break, and those who only trade London may even call it a day at the lull.
New York Session
Next we have New York Session which to some is their preferred session either because they live in the Americas, or they’re Brits/Europeans who are just too lazy to get up early for London session and prefer to start trading at 1:00PM in their local time zone (just kidding, we love you guys). New York session is a special one because it also includes the U.S. Stock Market open which brings volatility to certain asset classes that FX traders may trade including indices.
Pre-New York Open
Similar to Frankfurt open, we like to call the first hour before the New York FX Session open “Pre-New York Open”, as it sometimes has volatility and trade setups that are totally worth taking. This is the period between 7:00AM EST and 8:00AM EST. Is there consistent volatility at this time? Not generally. But, the reason we put this in the article is so you’re aware of it as a professional FX trader and you’re ready to hit an early setup if it comes, so you can get in before the major NY session move happens.
New York Open
Next we have the FX New York Session Open at 8:00AM EST which usually comes with big volatility, but not as consistently timed as London session’s hour or two. Within the NY session you’ll typically see a big push in volatility on the major pairs and North American indices at any time from around 7:00AM EST to 11:00AM EST, and sometimes slight volatility as late as 1:00 – 2:00PM EST. It should be noted that London Session closes at 4:00PM local time (GMT/BST), which means there is no longer any overlap from London based banks, financial institutions and traders, leading to a drop in volume in the forex markets.
U.S. Stock Market Open
Finally we have the U.S. Stock Market Open which officially opens at 9:30AM EST. If you’re trading the major pairs, sometimes you’ll notice volatility in the markets at around this time and it’s usually because US stocks and equities are starting to see a huge pump in volume as the opening bell rings. Aside from that you also have the pre-market session which is considered an “early auction” which is why you’ll sometimes also see movement early in the market for indices.
Session liquidity is a concept that can help us with identifying highs and lows that may potentially be unprotected (and swept) or potentially targeted. The idea is that as a session and or day prints in price action the high or low of that session or day generally will have a pool of liquidity above and below it, whether price ranged or it’s a swing point on a mid-timeframe. Either we can anticipate new highs or lows (a sweep/run on liquidity, then push in the opposite direction), or we can use a high or low as a target depending on the mid-to-high timeframe structure and context.
Session Highs and Lows
Determining the highs and lows of a session are simple. Using a session range indicator with the correct market open and close times will automatically mark out the high and low of every session on the day, and of previous days so you can see where liquidity is pooling. Depending on whether that liquidity is going to be swept or run before price pushes in the opposite direction, or it’s internal range liquidity that we can expect will be targeting and pushed past, having an idea of where liquidity is sitting is extremely helpful for providing context to your intraday bias and trade ideas.
Highs and Lows of Day
Similar to session highs and lows, the HOD (High of Day) and LOD (Low of Day) are also major levels of liquidity that can either get swept or be used as targeted liquidity to fuel a move. Typically you’ll want to mark out previous days highs and lows to get an idea of what liquidity is pooled where, and potentially even the current day high and low if you’re in range bound price action.
Moving on we have market cycles, both intraday, weekly, and even monthly and yearly – but in the interest of keeping this relevant, we’ll only be covering intraday and weekly cycles as they’re the most commonly used by forex and stock market day traders. A market cycle is just that, a cycle within a described period of time in which we can expect the market to move in certain ways due to varying periods of volatility.
Weekly cycles are quite simple, expect Mondays and Fridays to have more range bound price action, and Tuesdays, Wednesdays, and Thursdays to trend for the week. Alternatively, sometimes price action will have mid-week reversals depending on the price action context. Again, these are rough concepts and are not always present in the market, so it’s best to use market structure and liquidity to get a more accurate idea of what is likely to happen next.
Last but not least we have intraday cycles which can be defined by different combinations of major moves in each session, all adding up to a different variation of the intraday cycle. Again, it should be noted that mid-to-high timeframe market structure and liquidity traps should be prioritized over using these cycles. These cycle variants are simply a way to interpret what may happen from an intraday perspective, but should not ever be used in isolation.
At Phantom Trading we teach traders how to properly read manipulation in the market by utilizing market structure, orderflow, and liquidity to get a good idea of what direction price is likely to move for the day. These variants are best used as maps to plan out the different scenarios you may want to play depending on what session(s) you trade.
New York Session – Reversals
New York Session – Pure Continuations
The Asia Session Whipsaw – London HOD/LOD Re-test / NY Session Continuation
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Robert Castillo – Currency & Commodities Trader,
Financial Analyst, Writer & Editor.
Robert is a funded trader based out of Toronto, Canada, and has been trading currencies, commodities, stocks, and cryptocurrencies for over 7 years. Outside of trading he enjoys producing music, mixed martial arts, and riding his motorcycle in the summer.