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Why does the low of the day occur in the ny session forex?

The foreign exchange market, also known as forex, is a decentralized market where currencies are traded 24 hours a day, five days a week. The market is split into four major trading sessions: Sydney, Tokyo, London, and New York. Each session has its own unique characteristics and trading opportunities, but traders tend to focus on the New York session as it is the most active and liquid session.

One of the most intriguing aspects of the New York session is the occurrence of the “low of the day.” The low of the day refers to the lowest point that a currency pair reaches during the trading day in the New York session. This phenomenon has puzzled many traders and analysts, and there are several theories as to why it occurs.

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One theory is that the low of the day occurs because of the overlap between the New York and London sessions. The London session, which is the largest forex trading session in the world, opens at 3:00 am EST and closes at 12:00 pm EST. The New York session opens at 8:00 am EST and closes at 5:00 pm EST. There is a four-hour overlap between these two sessions, from 8:00 am EST to 12:00 pm EST.

During this overlap, there is a significant increase in trading volume and liquidity as traders from both sessions are actively trading. This increased activity can cause volatile price movements, which may result in the low of the day. Traders may also use this overlap to take advantage of the increased liquidity and volatility by entering trades at the low of the day and riding the price movement upwards.

Another theory is that the low of the day occurs because of the release of important economic data. The New York session is when the majority of economic data releases from the United States are announced. These data releases can have a significant impact on the forex market and may cause price movements that result in the low of the day.

For example, if the US non-farm payrolls report is released during the New York session and the data is worse than expected, it may cause a sell-off in the US dollar. This sell-off could push the price of a currency pair to its low of the day. Traders may use this information to enter trades and profit from the price movement.

A third theory is that the low of the day occurs because of the end of the trading day. The New York session is the last major forex trading session of the day before the Asian session begins. Traders who have open positions may want to close them out before the end of the day to avoid the risk of overnight price gaps.

This rush to close out positions may create a downward pressure on prices, resulting in the low of the day. Traders may also use this information to enter trades and profit from the price movement.

In conclusion, the low of the day is a common occurrence in the New York session of the forex market. While there are several theories as to why it occurs, the most likely explanations involve the overlap between the New York and London sessions, the release of important economic data, and the end of the trading day. Traders who understand these dynamics can use them to their advantage and potentially profit from the low of the day. However, it is important to remember that the forex market is unpredictable, and there are no guarantees in trading.

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