There is simple rule :
Never Buy a Friday High and Never Sell a Friday Low
Based on dailyfx article Never Buy a Friday High by Kristian Kerr, we can see several examples where Friday is risky day for trading. a lot of traders avoid Friday trading.
Why not trade on Fridays?
Generally the directed trends are estimated after they finish. For better trade, the estimations of trend directions must be made at the start of the week. The weekly market trend has two shaping factors,
1. Movement of currency pairs on Fridays (on stock exchange of America) are the foremost moments of determining market behavior.
2. The opening gaps (difference in prices between the previously ending session and next session beginning) at midnights from Sundays to Mondays i.e. Asian session.
The significance of first factor has been tested through news releases and trends’ direction.
In between the American sessions (Mondays) and the Asian sessions (Fridays) the levels of resistances set the start point of a particular currency pairs that break through either upwards or downwards. And generally the entire week’s movement is in this direction.
In case some news (positive or negative) did not affect the fluctuations in the Friday’s Forex market, it implies that banks and brokers were not prepared for such news and movements would then begin on Monday. If trends show sudden changes there are two possibilities; a new wave of trend or a new jump along the same trend.
In case on Friday (American session) the currency did not start any movement, it implies the brokers failed to estimate trends of direction of motion for the upcoming week. Ans it would show now on Monday.
From the above discussion we can conclude that the behavior of Elliot wave on Friday sets the next week starting movement of currency.
1. In case strength of a potential trend is high and on Friday there was a leap in direction of trend, then a correction, reverse or news trend is expected on Monday
2. In case the currency leaped against the direction of trend on Friday, then a correction trend or a first wave of reverse trend would be formed.
3. In case there was no movement in currency on Friday, a movement must be expected on Mondays or Tuesdays.
Another peculiarity of Forex market is analyzing the news calendar for the upcoming week. Events that can affect trends or corrections must be marked.
Also pay extra attention to gaps that appear on Friday midnights to Mondays, as to whether the ally currency pairs opened upwards or downwards, and the direction in Asian session the currency would move. This direction would be followed in the upcoming week.
In order to gain from the market, you must realize that intraday tends do not exist by themselves.
A trader must drive home the conclusion that the main distance is covered by currency before some release of news and slight movement is while the news is confirmed thus justifying the forecast.
For correct decision, trade must abide by two principles;
1. It is essential to employ the strong movements throughout the week that move in direction of the news that is published.
2. Be prepared for reverse trends in case the news did not go as expected.
My trading statistics told me that I should avoid Friday trading. What is your opinion ?