The Intraday Market Cycle

This article written by Øystein Nerva was originally published in the November 2011 issue of Traders' Magazine.

  • Øystein Nerva has a master degree in finance, and for the last couple of years he has been working as an equity sales trader in Oslo, Norway. In order to gain an edge for his clients he uses statistical analysis of price movements to optimize timing and to gain insight into likely future trend
  •  

Have you ever noticed the extreme volatility at the start of the trading day and how the trading range from the first 30-60 minutes of the day tend to set the bias for the rest? After reading this article you will know how to use this time zone to predict the intraday market cycle and identify where highs and lows of the day are most likely to occur.

As you can see in Figures 1 and 2, the trading day can be divided into three stages. First we have the volatile and emotional opening range (OR), followed by the boring midday doldrums (MD) and then the closing range (CR). Two of these stages or time zones have a high probability of containing extreme readings (high or the low of the day) while one has a very low probability of such readings.

 

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these securities. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Forex involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility.