Thursday March 26, 2020 - 16:33:58 GMT
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Classic Monday Effect Week
I wrote an article on March 10, Forex View: Be on Alert for the Monday Effect, describing one of my favorite trading patterns.
It is called the Monday Effect. This pattern occurs when a high or a low for the week is set on Monday. As the market moves away from the Monday high or low momentum tends to build in tho opposite direction as the week winds on. When this occurs, risk is for a squeeze on those who established positions on Monday (often with the trend) and are now vulnerable to getting stopped out (note key stops tend to build in size as the week goes on).<
The Monday Effect pattern is strongest when the high or low is set in early Far East trading as the week opens, momentum starts to build the other way later on Wednesday and carries over into Thursday or even Friday. However, as we all know, markets rarely operate like a textbook so as long as the high or low for the week is set on Monday, there is a risk for this pattern to play ou., which has had a classic Monday Effect
Take the current week in the EURUSD, which saw a classic Monday Effect as shorts with the prevailing trend got squeezed out.
Current price: 1.1022
- Monday’s low 1.0637 set around the Far East opening for the week
- Momentum started to build on Wednesday
- This has carried over into Thursday as those short get squeezed.
Weekly Forex Trading Pattern
There is another pattern that I have been sharing, which repeated itself this week as well. It is call the Weekly Forex Trading Pattern, which worked like a textbook this week, that you can access by clicking here
Feel free to contact me at [email protected] with any questions.
Founder, The Amazing Trader
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