The New York session begins while London remains active, creating one of the deepest liquidity windows in Forex. The same period can extend the European move or reverse it after US data, so continuation and reversal must be defined as separate rule sets.
Choose continuation or reversal before entry
A continuation setup requires a clear London trend, a controlled pullback and renewed momentum as North American liquidity arrives. A reversal setup requires exhaustion or a failed break at a meaningful daily level, followed by a structural change. Do not call a losing continuation a reversal after the fact.
Continuation needs an intact London trend; reversal needs a failed extreme and a genuine structural change. A large prior move alone is not reversal evidence. The news exclusion rule addresses discontinuous fills, while a nearby-level check addresses limited target room. Keep the models separate even when they occur in the same session.
Resolve the session clock with the time-zone and DST guide before identifying a setup. For one fully specified breakout variant, compare the New York range with two-close confirmation; its fixed window and exits must be evaluated together.
Map London structure before New York opens
Mark the London high, low, opening area, current daily range and nearby H1/H4 levels. Note whether Europe produced a trend, a balanced range or an exhausted one-directional move. Convert the New York window from UTC to broker time and account for the weeks when US and European daylight-saving changes do not occur on the same date.
EURUSD, GBPUSD, USDJPY, USDCAD and liquid USD crosses.
M15 or M30 triggers with H1/H4 context.
London structure, US releases, yields and daily levels.
Entry rules
Momentum continuation
- London establishes higher highs and higher lows above a relevant level.
- The pullback holds above the broken structure.
- New York participation produces a bullish close or tested momentum trigger.
- Enter only if the next resistance leaves adequate reward.
Failed-move reversal
- London extends into major resistance or an exhausted daily range.
- A new high fails and price closes back below the trigger zone.
- A lower high or support break confirms structural change.
- Enter on confirmation, not solely because the move looks overextended.
Mirror the rules for bearish continuation and bullish reversal. Keep the two models tagged separately in the journal so that their statistics cannot hide each other.
An illustrative window is 08:00–11:00 America/New_York, converted separately for each date to UTC and broker time. Set the news exclusion and position-closing cutoff before testing. For bearish continuation, require a lower-high pullback and renewed bearish close. For bullish reversal, require a failed low, reclaim and higher-low confirmation. A losing position is never relabeled as the opposite model.
Stop Loss and Take Profit
For continuation, invalidation normally belongs beyond the pullback swing or back through the reclaimed London level. For reversal, it belongs beyond the failed extreme. Potential targets include the London high or low, session midpoint, daily open and the next H1/H4 zone.
Late entries after a large US impulse often offer poor reward relative to the logical stop. Missing the trade is preferable to shrinking the stop until ordinary volatility can hit it.
Handle US data and the cash-market open explicitly
Major US and Canadian releases can create spread expansion, gaps between ticks and rapid two-way movement. Define whether the system stands aside, waits for a post-release candle or trades only after a retest. The US equity cash open can also change risk sentiment, so the same setup may behave differently before and after it.
If the strategy trades announcements, use conservative slippage and spread assumptions. If it avoids them, encode a reproducible exclusion window.
Risk and portfolio controls
Position size follows the stop: divide the planned cash-risk budget by the estimated loss per lot in the account currency at that stop, including costs. Round down to the broker’s volume step; if even the minimum lot exceeds the budget, skip. Here 1R is the initial entry-to-stop price distance; costs reduce the gross reward multiple.
US dollar pairs can move together after a common catalyst. Three small positions may represent one large USD bet; size them as a portfolio rather than independent trades.
Example trade walkthrough
The continuation schematic uses hypothetical EURUSD levels. A bullish London trend pulls back to support; a completed renewal candle permits consideration of BUY at 1.1020, SL at 1.1010 and TP at 1.1040. The gross distances are 10 and 20 pips, giving 2R before costs.
The later failed-move branch illustrates a separate possible reversal, not an automatic short after TP or SL. Each branch requires its own confirmation and risk budget. Neither drawn path is an observed trade or a backtest result.
How to test it responsibly
- Classify each day as London trend, range or exhaustion before viewing the outcome.
- Store session times in UTC and document daylight-saving conversion.
- Tag continuation, reversal, news and non-news trades separately.
- Include spread, commission, slippage and unfilled orders.
- Validate on unseen months and different volatility regimes.
- Forward-test the complete routine, including days with no trade.
Tag continuation and reversal separately, and split samples by release-day policy and position within the overlap. Test the weeks when US and UK daylight-saving dates differ. Record canceled signals and adverse fills as well as completed trades; simultaneous USD-pair signals share a currency exposure that needs an aggregate limit.
The overlap can be liquid and still produce losses, false breaks or no valid setup. This framework is educational, not investment advice.
Clock reference: NIST.