8.27 Strategy: The New York Session Reversal

The global Forex market operates in sessions: Sydney, Tokyo, London, and New York. By far the most volatilevolatile: A statistical measure of the dispersion of returns for a given security or market index. High volatility means prices move rapidly in a short period. and heavily manipulated period occurs between 3:00 PM and 5:00 PM East African Time (EAT). This is the 'Overlap Window' where the London session is closing out its positions while the Wall Street (New York) session is simultaneously waking up and injecting massive liquidityliquidity: The degree to which a currency can be quickly bought or sold in the market without affecting its price. High liquidity means tight spreads and smooth execution..

The New York Session Reversal strategy is designed to capitalize on the exact moment US banks deliberately reverse the trend established by London earlier in the morning.

Between 10:00 AM EAT and 2:00 PM EAT, observe what the London session did. Did they push EUR/USD aggressively higher by 60 pipspips: Percentage in Point. The smallest price move that a given exchange rate makes based on market convention (typically the fourth decimal place).? Draw a box identifying the absolute high and low of the London session. This establishes your daily framework.

Around 3:00 PM EAT (or 3:30 PM depending on Daylight Saving Time), New York banks enter the chat. Instead of continuing the London trend, they will often execute a rapid, fake-out spike in the same direction as London to trigger retail breakout traders and hunt stop losses. This fake spike is famously known in SMC circles as the 'Judas Swing'.

You do not trade the Judas Swing. You wait for it to happen, sweep the liquidityliquidity: The degree to which a currency can be quickly bought or sold in the market without affecting its price. High liquidity means tight spreads and smooth execution. above the London High, and then aggressively collapse back below the London High level. Once the 15-minute candle closes violently in the opposite direction (e.g., a massive Bearish Engulfing candle rejecting the highs), you enter a Market Sell order.

Your Stop LossStop Loss: An automated order placed with a broker to buy or sell once the price reaches a specified level, designed to limit your loss on a position. goes exactly 10 pipspips: Percentage in Point. The smallest price move that a given exchange rate makes based on market convention (typically the fourth decimal place). above the tip of the Judas Swing wick. Your Take ProfitTake Profit: An automated order to close a trade at a specific price to lock in a profit. target is the exact opposite side of the London session (the London Low), capturing the entire intraday reversal.