Forex markets get started late afternoon on Sundays (as Australia and the Asian sessions get rolling) so I always like to get a head start on things – considering it “back to work time” Sunday around 4:00 p.m
The trade volume on Sunday leading into Monday is always very light, and many charts will often see “gaps” in price action. These “gaps” can provide for some interesting trade opportunities, as for the most part price action will almost always move to “fill the gap” before the larger volume trades kick in during London’s session as well the U.S come Monday morning.
In general I “usually” don’t initiate trades on Sunday night but will most certainly look to follow price action into the early morning on Monday – and even put on a couple “probes” if I see something that works.
This morning in particular I see that several USD pairs have made reasonable moves “counter trend” and with the continued framework of “further USD weakness” still very much in place, I do see some excellent entry points. BUT…..
Knowing the market as I do, it’s almost ALWAYS A BETTER BET TO WAIT A FULL HOUR AFTER THE OPEN ON MONDAY as over excited “newbie traders” rush through the doors bright and early – only to be met by our dear friends on Wall Street and their usual “host of surprises”.
Trust me – you will not miss a single things as far as “timing your perfect entry” if you can just hang on an extra hour or two to let the “Monday morning fleecing” run it’s course – then take another look and see where the dust has settled.
Patience is a huge part of Forex trading, as time and time again I find myself doing a lot more “waiting” (with my money safe in hand) than I do actually “trading” with a pack of hungry wolves on a Monday morning open.
Personally I see the tiny “pop higher” in USD here this morning as a great re-entry “short” via several pairs.
Looking long AUD/USD as well NZD/USD as well (gulp) EUR/USD as well short USD/CHF and USD/CAD.
Maximizing Monday Morning Market Psychology
Reading the Sunday Night Setup Like a Pro
When those Sunday gaps appear across major pairs, you’re looking at more than just price action – you’re seeing institutional positioning and weekend news digestion in real time. The key is understanding that these gaps rarely represent genuine market sentiment. Instead, they’re often the result of thin liquidity and algorithmic rebalancing as the new trading week kicks off. Smart money knows this, which is why you’ll see those gaps filled with mechanical precision about 80% of the time before London gets serious.
Take a close look at how USD/JPY behaves during these Sunday opens. The yen pairs are particularly susceptible to these gap formations due to the timing overlap with Tokyo’s early session. If you see a 30-50 pip gap higher in USD/JPY Sunday night, mark that level on your chart. Nine times out of ten, you’ll see price gravitating back toward that gap fill level within the first four hours of Monday’s London session. This isn’t coincidence – it’s institutional order flow doing exactly what it’s programmed to do.
The Monday Morning Retail Massacre
Here’s what happens every single Monday morning without fail: retail traders wake up, see those overnight moves, and immediately assume they’ve missed the boat. They pile in chasing Sunday’s price action, often using excessive leverage because they’re convinced this is “the big move” they’ve been waiting for. Wall Street market makers are sitting there with their morning coffee, watching these predictable retail patterns unfold like clockwork.
The professional money waits. They let retail establish their positions first, then they systematically take the other side of those trades. This is why you see those violent reversals 60-90 minutes after the Monday open. It’s not random market volatility – it’s calculated positioning by traders who understand order flow dynamics. EUR/USD is especially prone to this pattern because it attracts the highest retail volume globally. Watch for those early morning spikes above key technical levels, followed by swift rejections that leave retail traders holding the bag.
Currency Strength Rotation Patterns
The framework of continued USD weakness isn’t just a fundamental call – it’s a structural shift that creates specific trading opportunities across the currency spectrum. When the dollar weakens, it doesn’t happen uniformly across all pairs. Commodity currencies like AUD and NZD typically lead the charge higher, while safe-haven flows into CHF and JPY create different dynamics entirely.
AUD/USD above the 0.6700 level becomes a momentum play, especially when copper prices are showing strength. The Australian dollar has this beautiful habit of trending in sustained moves once it breaks key psychological levels. Same principle applies to NZD/USD, though the kiwi tends to be more volatile due to lower liquidity. The trick is catching these moves after the initial Monday morning shakeout, not before. Let price establish genuine direction first, then ride the trend with proper position sizing.
Strategic Entry Timing and Risk Management
That “tiny pop higher” in USD during Sunday’s session represents exactly the kind of counter-trend move that creates optimal short entries – but only if you time it correctly. The mistake most traders make is jumping in immediately when they see price moving against the prevailing trend. Professional traders wait for confirmation that the counter-move is exhausted before establishing positions.
USD/CHF below parity and USD/CAD under 1.3500 present compelling short opportunities, but not until London volume confirms the rejection of Sunday’s highs. This is where patience pays dividends. Watch for those reversal candle patterns on the 30-minute charts about two hours after London open. That’s your signal that institutional money is stepping in to fade the retail positioning.
The beauty of this approach is that it keeps you out of the early morning chaos while positioning you perfectly for the real moves that develop once genuine price discovery begins. Your risk-reward improves dramatically because you’re entering after the market has shown its hand, not before. Remember – in forex trading, the money you don’t lose is just as valuable as the money you make. Every Monday morning proves this principle over and over again.
Good morning Kong & All,
Now that you informed me that the picture is pencils, and in the clear light of sobriety, it is amazing work.
An old market aphorism, “If a trade is a good idea now, it will still be a good idea five minutes from now”.
Being trigger happy (entering too soon) is another sin I still battle. Thanks for the reminder Kong.
Good week everyone.
On a personal note – I “was” pretty much “the most impatient person on the planet” some years ago. With almost everything – waiters/restaurants , girlfriends , fishing , hunting , driving , diving – you name it, I was usually “hot under the collar” long before anyone else.
Then along came “forex”, and I was forced to tackle it.
My family and friends even say I’ve changed.
It may have taken a couple of years but learning to be patient when trading forex has been a huge step forward. For the account balance too.
Hi Forexkong, would you look to short usd/jpy as well if you are shorting usd/chf and usd/cad?
In this case ( considering I see further USD weakness coming ) yes at these levels around 98 – yes.
Ultimatley I want to buy this pair, but as it stands – this is a low risk short entry around 98 area.