London Field Reversal Foreign exchange Buying and selling Technique

The opening of the London session is full of opportunities. This is due to the inherent features of the London Open that allow traders to do the best for their money. The London Box Reversal Trading Strategy is a strategy that generates Forex market profits caused by reversals during the opening in London.

Before opening in London, the Tokyo market usually sets the tone for the upcoming trading day. This can either be a change of direction leading to a trend market, a flat and calm market that forms a range, or a continuation of the direction of the previous trading day.

Mostly, London traders also received advice from traders in Tokyo, where they would feel the intraday move. However, the London Open is a different animal in itself. Due to its size, trading volume and volatility, the market could reverse dramatically even during the opening in London. There are many cases where the trend observed during the Tokyo session is completely ignored during the opening in London and reverses immediately. However, there are clues that could give us an idea of ​​whether the market could reverse.

As previously mentioned, the Tokyo session would normally define an area where the market moves during that session. This is characterized by the intraday high and low during the Tokyo session. Whenever the price reaches these areas, the price can react in different ways. It could either break out or bounce off as these intraday lows and highs are natural supports and resistances. This strategy makes money in times when the market would recover from this support and resistance.

Forex breakout box

The Forex Breakout Box is a custom indicator designed specifically for the London Open's potential to break out of or bounce off the Tokyo session.

It marks the highest high and lowest low during the Tokyo session. These points mark the extremes of the reach of the Tokyo meeting. The indicator that draws a purple box that indicates the reach of the session in Tokyo. This area is then expanded by creating two more fields to identify the London session, one blue and one orange.

Trading strategy concept

This custom indicator is useful for GBP and EUR pairs in most cases. It can be used for either breakouts and reversals. With this strategy, we would mainly focus on reversals.

With the market spreading during the Tokyo session, it is often difficult for the market to break out of the Tokyo spread. There were often one or two visits to the high area. When the London market opens, the direction of the market becomes clear. You would often see the market reverse almost instantly when the London session begins. However, we use a two-hour window for this strategy. This means that the reverse setup should take shape within this period from the London Open.

The reverse pattern is basically a pin header showing a rejection of the top or bottom of the box relatively close to the start of the session. When zoomed out or placed in a higher time frame, it usually also forms a variety of reversal patterns, such as: B. double tops and bottoms or triple tops and bottoms. Once we identify a pin bar pattern within the assigned window, we take the trade as an inverse and aim at the other end of the range.

Indicators:

Time window: 5 minute time frame; Reduce the view to 15 minutes to look for a possible reversal pattern (optional).

Currency pair: any EUR and GBP pairs; preferably EURUSD, GBPUSD, EURJPY and GBPJPY

Trading session: London only open

Buy (Long) Trade Setup

entry

  • Observe the behavior of the market at the end of the Tokyo session and preferably show that you are unable to break our range
  • Wait for the price to touch the bottom of the orange rectangle
  • Wait for the price to form a bullish pin header, the tail of which touches the support level
  • Place a purchase order as soon as the bullish pin header forms

Stop loss

  • Set the stop loss below the entry candle and below the bottom line of the blue rectangle

Take profit

  • Set the target take profit a few pips below the top line of the orange rectangle

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Sell ​​(Short) Trade Setup

entry

  • Observe the behavior of the market at the end of the Tokyo session and preferably show that you are unable to break our range
  • Wait for the price to touch the top of the orange rectangle
  • Wait for the price to form a bearish pin header, the tail of which touches the resistance level
  • Place a sell order as soon as the bearish pin header forms

Stop loss

  • Set the stop loss above the entry candle and above the top line of the blue rectangle

Take profit

  • Set the profit taking target a few pips above the bottom line of the orange rectangle

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Conclusion

This strategy is the exact opposite of the usual London breakout strategy. Most traders would only take outbreaks from the area formed during the Tokyo session. However, there are other traders who would actually trade the reverse by using it as the basis for a sectoral market configuration.

The key to this strategy is that the reversal occurs at the start of the London opening. This would indicate that traders in London disagree with the positions of traders in Tokyo. This would normally be the case even when there is a market whisper of a basic message that has reached the media appearing at the London Open. This would often lead to a sudden reversal of direction, but shouldn't come as a shock to experienced traders as the Tokyo market typically lacks the volume to place trading in a far-reaching situation. This could also lead to a reversal of the higher timeframe, which could mean bigger gains if trading is kept out of range.


Installation instructions for forex trading strategies

The London Box Reversal Forex Trading Strategy is a combination of Metatrader 4 (MT4) indicator (s) and template.

The essence of this forex strategy is to transform the accumulated historical data and trading signals.

London Box Reversal's forex trading strategy offers the ability to identify various peculiarities and patterns in price dynamics that are invisible to the naked eye.

Based on this information, traders can accept further price movements and adjust this strategy accordingly.

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Click here to get the XM Trading Account Opening Guide step by step

How do I install the London Box Reversal Forex Trading Strategy?

  • Download London Box Reversal Forex Trading Strategy.zip
  • * Copy mq4 and ex4 files into your Metatrader directory / Experts / indicators /
  • Copy the tpl file (template) into your Metatrader directory / templates /
  • Start or restart your Metatrader client
  • Choose the chart and time frame in which you want to test your forex strategy
  • Right-click on your trading chart and move the mouse pointer over "Template".
  • Move right to select the London Box Reversal Forex Trading Strategy
  • You will see that the London Box Reversal Forex Trading Strategy is available on your chart

* Note: Not all forex strategies come with mq4 / ex4 files. Some templates are already integrated in the MT4 indicators of the MetaTrader platform.

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