EUR scalping at the European Open

In this thread I shall demonstrate the strategy for scalping the EUR/USD around the European opening. Price can move at around 7 am or 8 am for a good scalp.

For this strategy, the first thing we do is identify the major trend on a 30 m time frame. When the trend is up then we will scalp with a long position. If the trend is down then we will scalp with a short position. So, the rules of the strategy are:

1. Only ever scalp in the direction of the major trend.
2. Use a 5 or 10 M chart with a daily pivot and support/resistance levels for the trade. (See attached examples).
3. For a long position make sure that price is already above the daily pivot, and for short trades price is below the daily pivot.
4. For long trades be sure that the 20 ma (green) and 50 ma (blue) are above the 100 ma (yellow), and for short trades the 20 ma (red) and 50 ma (orange) are below the 100 ma (yellow).
5. Price will usually move slightly in the direction of the trend at abvout 7 am (GMT).
6. Wait for it to pause or retrace a little before entering the trade at about 7:30. Set a stop at 20 and a target of 20 or 30 or 50. A 20 pip profit is the norm, but a strong move could realise 30 or even 50 on a good day.
7.Do NOT trade when a high impact 'news' item is scheduled to be released.


The set of charts below shows price action from the 7:30 pullback to its profit top.

This chart of EUR/AUD illustrates this simple scalp strategy.

Step 1. Identify the major trend, which in this example is to the upside.
Step 2. Wait for the pull-back at around 7 am, and let it settle into the next bar on the 10 m time-frame.
Step 3. Take a long position in preparation for the rally which will start at about 7.30 to 7.45.

Sometimes price may move rapidly all the way up to the 1st resistance level, in which case, for EUR/AUD, the target for take profit is set to 100 pips. In this example the move was a little weak and realised only 36 pips.

Try this strategy and see how it works.

Btw what is your time zone? GMT+?

My time zone is GMT (London time).

Here is a chart showing this morning's (Weds 20th May 2015) scalp action, with an explanation for entry strategy.

Here is the 30 m chart which is showing a definite down trend. So the move will be a short trade.



And here is the 10 m chart showing details for position entry: Note the first sell signal at about 5:30. It is wise to wait until price has pulled back towards the daily pivot, and then started to head down again. Catch the entry before it moves too far or too fast, and then exercise patience. A 50 pip scalp is a reasonable expectation as this chart shows.

News releases due on French and German flash manufacturing mean we keep out of the market. Too much indecision and unpredictability mean too much risk.

Today is a bank holiday in UK, but that does not mean we can't trade. The Forex markets are still open, and here is today's trade to prove it.

Following the rules, we can see that EUR is in a down trend against all other currencies, so we waited for the pull-back and entered just after 8 am.

This chart shows the result of a live trade:



I also made 18 pips on the EUR/NZD, and the demo account result can be seen on the explorer linked to this thread.

This is a continuation of a discussion started on the Daily Pivot thread at: http://www.forexfactory.com/showthre...70#post8394270

Here is an update on this strategy from the last comment on the Daily Pivot Bounce discussion:

So, my conclusion is that the only true indicator is what price is actually doing, or 'price action', which is activated by and maintained by the momentum of 'market sentiment'. In other words, the charts are a graphic illustration of the global totality of market sentiment towards a particular currency. That being so, if global market sentiment is bullish to the Euro, (or any other currency) then that currency will move up against 'all other currencies'.

This means that if we get the direction of movement right, in accordance with global market sentiment, then we can trade that currency with any of its pairs or all of them. When this has happened, from time to time, I have cashed in, so the question is, 'how can we recognise a global sentiment in favour of one currency so that we can cash in on its price action'? We saw this 'global sentiment' phenomenon yesterday with the Euro. When it happened, price action crashed through the daily pivot and all other resistance levels, pushed by powerful momentum. When this happens we are offered the opportunity to jump on the trend when price retraces from time to time. Its a bit like waiting for a train to slow down before trying to jump on it.

Now, these strong moves, powered by global sentiment and momentum are rare, but easy to spot when we become aware of them. They start with a strong solid bar 'on all pairs'. Price will retrace very slightly and then proceed when other traders 'jump on' the train. Thus, the breakout becomes the start of a strong new trend. However, these breakouts are not the norm. The 'norm' is more likely to be a consolidation pattern where price action moves sideways between highs and lows that show themselves in the wicks of the candles at the lower and higher extremes of the sideways channel. When this is the normal pattern then the normal strategy would be to 'fade' (trade against) the spike.

I have placed an example of this type of price action below. The chart shows how price action has bounced up and down in a sideways movement, and illustrates where two trades could have been executed. It means setting a target of no more than 25 pips. I now plan to test this strategy over the coming week to see how effective it may be for those like me who want to 'scalp' a trade early at the European opening. Pay particular attention to the timings. Price spiked up starting at 7 and reversed at 7:30.

A strong rally overnight during the Oriental session suggested that the rally might continue with the European opening. A bull bar at 7 gave a good indicator of what was to follow. Notice the pullback until 8 am. Other indicators were given by EUR/CAD and EUR/AUD where momentum was strong.



All EUR pairs showed a very good move. See the four relevant charts below and pay particular attention to the pull-backs where it is wise to enter the trade.

Here is a good example of the strategy at work. A reminder of the strategy is:

1. Trade in the direction of the trend on the 30 M time frame. Today this was bearish.
2. Go to a 10 or 5 M time frame and wait for a retracement against the major trend to produce an upward spike.
3. When the spike begins to reverse take the trade.

The result is shown in this chart:

I have been out of the game for a couple of years, but now I am back. Here is my first trade on scalping the EUR/USD at the European open (GMT).

Price reached the bottom of the channel on the 4H chart (shown by the red line at the bottom of the attached chart). Although price had been trending sideways since Friday and over the Easter holiday, the strategy still worked.

See the attached chart.

[attach]17-Apr-17 8-42-31 AM.jpg

A dissapointing result this morning due to the market being dominated by a strengthening GBP. See the leader board of strength on the left of this chart. Indicators suggested a bullish EUR, so I took trades with EUR/USD, EUR/NZD, EUR/AUD and EUR/JPY on the basis that when the EUR moves it moves against the weakest currencies on the day. I would normally expect a spike up at 8 am, but this morning it didn't happen. But by opening trades to catch the 7 am upward bar I managed a profit of 35 pips mostly from the EUR/AUD pair. So, it pays to trade a basket.