What are the Best Times to Trade Forex in Singapore?
The best time to trade forex in Singapore is between 9 and 12 PM in the evening, as the London and New York markets overlap, creating the best trading conditions.
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Price action in forex is a technique of analyzing the forex market that studies the movement of currency prices without using any tool. Instead, price action leans on the observer’s ability to identify patterns and formations that price creates, with an expectation that they will reliably repeat.
This approach contrasts with fundamental analysis, which relies on economic data and news events to make trading decisions. While closer to technical analysis, price action does not involve indicators – which are actually price action movements simplified into a visual data point.
Price action involves studying a currency pair's historical and current price movements to predict future movements. The core concepts of price action include support and resistance levels. Support is a price level at which a downtrend can be expected to pause due to a concentration of buying interest. Conversely, resistance is a price level at which an uptrend can pause due to selling interest.
These levels act as barriers for price movements and knowing the nearby key support and resistance level is essential for any trader to identify potential opportunities, including entry and exit levels.
Price action heavily relies on identifying patterns that, by nature, fall into the reversal or continuation category. A reversal occurs when the price changes direction after reaching a peak or a thorough. At the same time, continuation patterns indicate that the existing trend will prevail and the price will continue in the same direction.
Reversals can be challenging to predict without considering higher timeframes, whereas continuation patterns are generally easier to handle as the trader already has an established directional bias.
Reversal patterns include head and shoulders, inverse head and shoulders, double top and double bottom.
Head and Shoulders Pattern on H4 Chart on EUR/USD, Source: TradingView
Popular continuation patterns include flags, pennants, and triangles.
Candlestick charts play a vital role in price action analysis. They provide detailed information about price movements within a specific timeframe. Each candlestick shows the open, high, low, and close prices, helping traders identify patterns and make informed decisions.
These strategies are commonly used in price action trading:
Risk management is crucial in price action trading to minimize losses and protect gains. This is particularly important in range trading, which often results in numerous small wins as the market tends to range. However, without adequate risk management, the losses would become outsized, making such a strategy unprofitable.
Although considered the Holy Grail of trading, the price action approach has disadvantages.
Singapore is located in Asia, so its residents might prefer to trade during the day. However, forex trading in Asian sessions differs from forex trading in London or New York sessions.
Its price action tends to be slower and more inclined to range between key levels. Thus, Singapore-based traders who aren’t trading in periods of high volatility in the evening might focus on trading the range and look for reversal patterns at key support and resistance levels. Check our guide on the best time to trade forex in Singapore.
Price action works in any liquid market, particularly in forex. Price action analysis relies on repeatable historical patterns that reflect the psychology of the market and aggregate results of actions between the buyers and sellers.
The head-and-shoulders pattern is statistically the most accurate price pattern. According to a statistical analysis by Samurai Trading Academy, this pattern plays out as anticipated around 85% of the time.
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What are the Best Times to Trade Forex in Singapore?
The best time to trade forex in Singapore is between 9 and 12 PM in the evening, as the London and New York markets overlap, creating the best trading conditions.
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