The currency markets are prone to volatile price swings during the summer months. Most institutional traders are off for the summer, meaning less trading activity, which leads to big price swings. Traders can avoid these volatile periods by using range-based systems and smaller time frames. In addition, they can take advantage of the low trading volume to capitalize on mini-trends and sideways action.
The first overlap of the trading day is between the Asian and European sessions, which take place at two different time zones. In the case of Asian traders, the first overlap takes place from 8 am to 9 am GMT, and in Tokyo, this overlap is from 5pm to 6pm JST. During this time, important economic numbers are released, making EUR/JPY and GBP/JPY more volatile than during other times of the week.
The Canadian dollar could do well this summer, as the central bank of Canada looks set to tighten monetary policy. However, the USD/CAD rate has been stuck in a range since mid-May. Its price has been capped between 1.20 and 1.22 since then, and investors may be looking for a breakout trade. The binary broker mt5,www.xm,xm com,xm fx currency pair could also prove to be a hot pair during the summer months. Despite the recent hawkish stance of the Norges Bank, the central bank of the Eurozone isn t quite ready to end its supportive monetary policy just yet.
While seasonal factors can impact trading in some seasons, it does not have the same impact on the forex market as in the case of commodities. Prices of commodities like oil are affected partly by global growth, but currency trading remains highly volatile throughout the year. As a result, traders should remain vigilant and take advantage of fundamental factors instead.
As a rule, currency pairs tend to experience more volatility on Tuesday and Wednesday, while low volatility occurs on Friday. This means that traders should trade only when these two sessions coincide. However, this doesn t mean that there is no trading in the currency market on Friday. Traders should be cautious and look out for signs of a slowdown or a trend reversal.
National holidays and major international events can disrupt trading activity. Those days can make or break a currency pair s performance. For example, a large game of soccer may reduce trading activity. Moreover, the World Cup is a popular global event, and the events associated with it can affect stocks and currencies in a number of countries. This means that forex trading during World Cup time will experience some significant changes. In addition to the World Cup, the stock market will be affected by other events, including stock and bond markets.
While forex trading takes place at night, the forex market has two separate sessions: the New Zealand and Sydney sessions. These two sessions overlap at certain times, which make them the most active times in the forex market. The Sydney session takes place between 19:00 and 22:00 GMT on Monday and Friday, while the New York session will be closed for the weekend.