Basket Trading the European Open

This is a trading system that can generate 100 pips at the European Open (8am GMT) by trading a basket of four currency pairs. Observation of price action shows that when the EUR/USD pair moves (for example), other currencies in concert with the EUR/USD pair also move. Why trade only one currency pair when a 25 pip scalping trade on four synchronized pairs will reach the 100 pip target. Setting rules is simple and when followed will produce the desired results.

For best results, three basic criteria need to be synchronized. They are:

1. Choose a currency that is strong relative to all other currencies for long-term trading. (Weakest for short trades).
2. All selected currency pairs move in the same direction.
3. The 7 AM candles of every selected currency pair on the 15 M time frame are pointing in the same direction (up for longs, down for shorts).

Here are the strategic steps to follow:

1. 6:30 AM (GMT) Check currency strength using a simple H/L leading list, as shown in the two example charts below. The best results are when currency pairs are grouped at the top (for long trades) or the bottom (for short trades).
2. Use the 30M chart to examine major trends. Use 20M, 50M and 100M moving averages and daily pivot points. Make sure the four pairs you choose move in sync ( they all have the same shape and trend) . If the trend is up, go long; if the trend is down, go short. Important Tip 1 : If you cannot identify a strong primary trend or the price is moving sideways - stay away. Important note 2 : Make sure the 50 and 100 moving averages are aligned. If the 50-day moving average crosses the 100-day moving average, it would signal a return to support or a potential trend reversal .
3. Only proceed if the first two conditions are met, then use the 5 or 10 or 15 M chart to determine the entry point for the pullback.
4. Typically, around 7 AM, a bullish bar appears for long trades and a bearish bar appears for short trades. This is your key metric. You can capture it with a stop loss order. If you miss it, wait for the callback. I've learned to call this 7 AM bar the " truth ' bar. Regardless of what may be happening with any other indicator, this 7 AM bar will point in the direction of future movement. The simple strategy is to enter your position in the direction it points.
5. After the 7 AM bar, there will usually be a pullback or pause until around 7:30 ( or 7:45 at the latest ), at which point the trend will resume until it peaks at 8 AM.
6. You can err on the side of caution and place a buy stop order above the last bar of the pullback on the 5 M chart, or a sell stop order below the bearish rising pullback. Retracements can be a bit scary if you use the 5 M time frame, but consider the action of the pitch. There is a similar movement of bringing your arms back before throwing. The stop loss order will eliminate any risk if the pullback turns out to be a reversal, which is unlikely to happen if you do follow the direction of the 7 AM "Truth" bar.
7. I use a 25 pip target and a 20 pip stop loss for scalping trades.
8. There's never a time when there's a high-impact news release pending or you 'll be blocked by a whipsaw.

Example 1. New Zealand Dollar Currency Pair

Example 2. Australian Dollar Pair