Frequently traders that trade for short time periods get clouded by huge noise vibrations that can often become misinterpreted. In this sense it could be more advantageous to focus upon the day to day trading ranges for a longer term perspective of where the market is going.
An example of a currency future would be the Globex CME future GBP
The current specifications for this unit are as follows:
Trading Unit: 62,500 British Pounds
Tick Size: $0.0001 BP = $6.25
Quoted Units: US $ per British Pound
Initial Margin: $1,890
Maintenance Margin: $1,400
Contract Months: Mar, Jun, Sep, Dec
First Notice Day: Next business day after last trading date.
Last Trading Day: 2nd business day before third Wednesday.
Trading Hours: Globex: Mon/Thur 5:00 pm - 4:00 pm Sun & Hol 3:00 p.m.-4:00 p.m.
All Chicago time.
The chart below is the recent trading range of the GBP
Now coming to out topic - Gap trade
I am quite sure you can spot this very easily.
On the 13th Dcember 2019 GBP opened at 1.3484
The previous session 12th December 2019 closed at 1.3179 and therefore the next days opening represented a significant gap up in price. Gap up areas in a day chart are usually followed by more reluctance to go higher by traders and therefore considerable pressure emerges as a price tends to drift sideways to lower in the subsequent days after the gap up.
For an educational perspective try to compare this chart with other day charts that you may find in forex, stocks or commodities as other examples of gap up or down prices movements and observe how the pressure for a reversal becomes greater in the days to follow.
Disclaimer - U.S. Government Required Disclaimer - Commodity Futures Trading Commission
Futures and Options trading involves risks of losses. No representation is being made that any reader and account will or is likely to achieve profits or losses similar to those that are being discussed on this blog http://forexeducationperspective.blogspot.com/. The past performance of any trading system or methodology discussed is not necessarily indicative of future results.
CFTC RULE 4.41 - HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN.
All trades, patterns, charts, systems, etc., discussed in this blog http://forexeducationperspective.blogspot.com/ are for educative and illustrative purposes only and not to be construed as specific advisory recommendations for actual trades. Disclaimer - http://forexeducationperspective.blogspot.com/ bears no responsibility for the trading actions of its readers.
