Do you Believe in 4 hr/Daily bars?

Based on London Time:
07:00 Start European Session
13:00 Start American Session
17:00 Close European Session
23:00 Close American Session
23:00 Open Asian Session
07:00 Close Asian Session

Obviously be aware of daylight saving.

you neglected to mention GMT in your times (for anyone who didnt already know the session times).

Hey mate,

This is a very good question and one that many people tend to neglect when using candlesticks in the forex market. The thing that seperates the forex market from all the other markets out there is the fact that it runs 24 hours a day, so there is no real close and open. Japanese candlesticks were designed to study the behaviour of market participants over a session. See the theory is that the more irrational money, or 'dumb money' is represented in the open price, and the rational money, or 'smart money', is represented in the closing price. Also, the closing price will represent the price at which market participants are willing to take the extra risk of holding the position overnight, which locks them into the position for a period of time. Therefore, to me it seems that the psychological aspect behind candlestick study is somewhat lost in the forex market, except in the weekly candles.

As other people have metioned in this thread, 4 hour candlesticks (for example) started on any hour will still show concepts such as rejection, but I believe it is better to zoom into the smaller time frames to get a better look at the real picture.

As far as daily candles go in the forex market, I believe a switch point at 5pm NYT holds the best psychological value as this is widely considered to be the end of the forex trading day. NY is the last session of the day and it is when all the big US banks are shutting up shop, balancing there books and moving money to where they want it to be overnight.

The one hour candles can also be usefull as a psychological indicator, as people naturally tend to devide their days into sections, and 1 hour is a natural devide that makes sense to a lot of people. You will notice that there is often a large move in the last few minutes or seconds of the hour, as people position themselves for the next 'section' of their day.

There is one other factor to consider however that does add to the validity of many other candles, and that is that trading is a self fullfilling prophecy. As a result, I will often look at 5m, 15m, 1h, 4h (deviding the day from either 5pm NYT or midnight GMT) and dailys (again, either 5pm NY or midnight GMT). As far as 4h and dailys go however, I will usually only give weight to those that create the same pattern in both the 5pm NYT and the midnight GMT devide.