Gap Analysis in Forex

Trading the Gap Close

Monthly Pivot Trading

4 hour Timing Trading Strategies

Daily Monthly Pivot Point

Trading market Gaps in Forex

The Euro opened with a market gap to 1.2624, which is the resistance zone of the 61.80 % fib retracement and the low of January 2012 (orange line) (EUR/USD Market Recap 07.06.12).

Market moved above this resistance (second test) but could not overcome the monthly pivot point at 1.2661. From there, the Euro bounced back and in the following EUR/USD (Forex) closed the gap from today.


On the 4 hour chart we see that the 4-hour candle closing at 12 a.m. GMT respected (closed at) the weekly pivot. Initially after the 4 hour candle closed market breached the weekly pivot point and EUR/USD formed a typical 3-wave consolidation pattern (5 min chart) below the weekly pivot before market resumed its down trend to close today's gap (Gap Trading).

1 hour Gap Trading

On the 1-hour chart we see that the Euro also closed at (respected) the daily pivot with the 3 p.m. candle before market initially breached the daily pivot point in the beginning of the next hourly candle.

Forex Market currently found some support at the daily 10 SMA.

Fib extensions

Trading the Fib extension levels 

Important Fib Extensions: 61.80 % 100 % 161 % 

Daily Candlestick pattern Doji

Yesterday, the Euro found resistance at January's low 2012 (orange line) and the 61.80 % fib retracement of the recent swing (EUR/USD Market Recap 07.06.12).

Yesterday's daily candle could not close above the 20 SMA and closed in the price range of the prior daily candle (false breakout). Furthermore, market formed a Doji bar or evening star chart pattern, which led to a sharp drop in price in today's Asian and European session.

1 hour Weekly Pivot point S/R

Fibonacci Levels and Fibonacci Trading

On the hourly chart we see that the sharp price drop started at 1 a.m. GMT ,right after yesterday's daily doji bar closed. The Euro got initially pushed down by the 10 SMA and 20 SMA. The price drop at 1 a.m. triggered the bear flag (blue circle) and the Euro moved to the 100 % fib extension (A-B at C ) and formed the second bear flag (D) at the green trend line and the 100 % fib extension (also 61.80 % fib retracement).

In the following, the Euro broke put of the bear flag and resumed it's down trend  to the weekly pivot point. (EUR/USD respected the resistance in form of a bear, which means that market could not sufficiently bounce back from support-bearish signal). Recently, market respected (touched) the hourly 10 SMA (green circle) at 3 p.m. and broke through it with the next hourly candle. The 4-hour candle closing at 4 p.m. also looks like a doji (support at the weekly pivot).

5 min ending diagonal, bear flag

On the 5 min chart we see the different bear flags (circled). After EUR/USD broke out of the first bear flag (blue circle) the Euro went to the 161,80 % fib extension (1-2 at 3) where market formed the second bear flag (red circle).The Euro broke out of the bear flag and went to the 100 % fib extension (5-6 at 7).

The EUR/USD found support at the weekly pivot (slightly penetrated but no confirmation, stop fishing below the low of June 6th-blue line) where it formed a kind of ending diagonal ((8-impulsive,9-correction, abcde-ending diagonal). The correction high (9-green line) is the initial target after the ending diagonal terminated, which market reached quickly (directional move). Recently, the Euro found resistance at the daily S2 (1.2492-not shown), the prior consolidation (red circle) and particularly the 61.80 % fib retracement (5-e-not shown) at 1.2493.