Gap fills, Pivot series, and Static Trendlines were all in play and behaved properly to start the week. Because all three were present, I thought I would use this as an example of how these various technical factors can work independently.
Here’s a look at the GBPUSD 5-minute chart with the tail end of Friday’s trading and then the Sunday open with a small gap up. These charts are on PST:
The first factor was that the GBPUSD gapped up slightly. We know that 80% of gaps fill the same day, and this was in the 80% as the GBPUSD headed down to fill the gap early at A. Gaps in Forex obviously only occur on Sundays, so it is nice to get the fill of the gap out of the way as quickly as possible.
The second factor was proper use of the Pivot series. Our Pivot series calculations are based on the traditional FX trading day, meaning that they are calculated from a 5 pm EST end of day/start of day. This is global rollover. Our trade call was long over the R1 level, and the important factor is how the GBPUSD used that level, triggering long at B breaking through but then exactly retesting the level to the pip at C, which gave traders a second shot at entry since the first move was fairly early in the session.
Our first target to sell half was at R2, and the move occurred from C to D very quickly. There was also a 9-bar move (the dashed box is drawn around that move) that ended at around the same time. The next push higher on the European open terminated in another 9-bar move that ended at E and that was the high of the session. However, this gives us our final technical to look at, which is the Static Trendlines (red line) created by that 9-bar move up to E. Static Trendlines often become trade-to targets and support after an energy move like that, and you can clearly see that the GBPUSD used the Static Trendline exactly at point F.
The rest of the session was spent between the prior high and the Static Trendline.
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