Intraday Rhythms of EUR/USD Pair
Determination of the step-levels
Time frames. To determine these levels - use H1, M15 and m5 timeframes where m15 plays the most important role as m5 candles are often twisted by different data feed of different brokers so they aren’t very reliable and especially when tenths of the pip determines the color of the candle. And h1 is just a bit „slow“ because often 20 pip intervals are crossed inside H1 candle, and of course if there is several H1 candles with opening and closing prices inside the range – just trade the breakout of the range..
Use m15 as your primary time frame to draw step-levels. Draw first support and resistance lines in M15 first and then check for additional support/resistance levels in m5 and H1 time frames. Switch to M15 again and choose the most closely drawn lines as your step-levels .It is good indication if closing/opening price from H1 time frames coincides with ones on m15 time frame. Also closing/opening price from bigger time frames should be above support lines drown in smaller time frames and below resistance lines in smaller time frames.
- Points where 20/40 pip levels coincides with previous sessions highs/lows are very strong – these produce good opportunities to scalp first touch for a few pips.
- Don’t try to „ride“ the whole range between step-levels. Price often changes direction in the middle between the levels. That’s why my profit targets are less than 20 pips - often in between 7 and 15 pips.
- After traveling first 40 pips in the session or swing – price often bounces back to the middle of that range. It is wise to exit trades at this point.
- Stop loss must be relatively wide – above/below another step-level. Usually my stop-loss limits are around 25-30 pips.
- Before rushing to trade price movement between step-levels, trader must understand that these intervals may change during different sessions. Often these changes triggers opening level of that session. Lets say London respected 2582, 2562, 2542... levels and NY opened right in the middle of the intraday range at 2555 and starts to move between 2535, 2555, 2575...
- Always look for reversal candlestick patterns approximately 20 pips apart – you may notice that new step-levels are forming. The point is to let price action decide what levels it wants to respect and just fallow it. It is good to have two or more newly established levels before moving to trade them.
- H1 opening and closing level often reveals market intentions for the next hour or few so don’t forget to always check where the first hour of the session started and where last hour closed.
- Often price reacts to round numbers one way or another – so don't rush to mark them as your step-levels.
- Always wait for at least one candle to close of the respective time frame before taking entry or limit order.
- Sometimes same step-levels repeats for a few days or even weeks – so don’t get frustrated by searching new ones every morning.