Trading Forex With The Asian Range

The hours from the time London opens for business until New York closes are widely regarded as the best time to trade Forex, and with good reason. It is during these hours that the Forex markets usually experience the highest liquidity, i.e. the highest volume of trading. High volume usually correlates positively with a high amount of price movement, which gives the retail Forex trader a chance to make money through directional trading. This means going long or short of Forex currency pairs and hoping to exit with a profit.

It is possible to trade Forex profitably by using either technical or fundamental analysis, or a combination of both. A common mistake made by many Forex traders is overcomplicating technical analysis. For example, the simple fact that the price is higher than it was a few months ago is probably going to be more significant and reliable than the exact value calculated by some fancy complicated indicator.

If you are interested in using technical analysis to trade Forex and you like to start your trading at around 8am London time, there are some very simple methods you can use to forecast the probable direction and strength of two major currency pairs –EUR/USD and GBP/USD – just by taking a quick look at the Asian range.

What is the “Asian Range”?

The “Asian Range” is not a concept that I invented. It is usually meant to refer to the high and low prices made by a currency pair from the time that Tokyo opens for business until London opens. Technically speaking, the Asian session runs a little beyond the time London opens as Tokyo stays open for an hour or so after that.

There are a few well-known trading strategies based upon a currency pair’s Asian range. The most well-known is probably trading the first breakout of the Asian Range, followed by using the highs and lows as key resistance and support, or trading reversals from fake breakouts. I am not convinced these strategies necessarily show reliable edges, but it can be shown that over recent years we can use the Asian Range to give a predictive edge as to what is probably going to happen between the London open and the New York close, just using a simple measure of how the price has changed during the Asian session, rather than looking at the highs and lows as is traditionally the case.