Asian range highs and lows as magnets

[Shadow Trader]

The Asian session produces a range that is visible to everyone, drawn by every free indicator. Because everyone knows where the high and low sit, stops cluster just beyond them. Traders who shorted below the high put protective orders above it. Traders who bought above the low put theirs below.

When London opens, there's often a quick push through one of those levels. Price triggers the cluster of stops, which fuels a brief spike, and then it returns. If the move beyond the range was followed by a failure to hold and a close back inside, it's called a false break or a sweep.

Of course not every sweep reverses. If the break is real, price keeps going. The challenge is telling them apart in real time. Two features seem helpful: how quickly price comes back inside the range, and whether the spike happened on a surge of ticks or on a thin trickle.

This is an old pattern and many people trade it, which means it can be crowded. The edge, if any, probably lies in the details of timing and filtering rather than in the idea itself.

Another detail is how the range gets defined. The Asian session doesn't have an official start and end. Many indicators use 00:00 to 08:00 server time, others 22:00 to 07:00 GMT, others the Tokyo session only. A different definition gives a different high and low, and with it a different level at which stops gather.

Because many people use many definitions, the "magnet" isn't one level but a cluster of nearby ones. That might explain why false breaks often extend a few pips beyond the obvious high, then reverse.

A way to study it: record the range under two or three common definitions for 20 days, mark which level price spiked through at the London open, and note the extent of the overshoot. The pattern, if any, will show in the table. If price consistently pokes 3 to 5 pips past the extreme before reversing, an entry rule that waits for the poke has some logic behind it.

How long does a false break need to be back inside the range before it counts as one?

[Amanhasnoname]

I use a simple rule for GBPUSD: price has to close back inside the range on M5 within three candles of breaking it, otherwise I treat the break as real. Before settling on that I tried waiting for an M1 close, but there were too many cases where price came back inside for a minute and then pushed out again and kept going.

The point about different range definitions is something I learned the hard way. My indicator drew the range from midnight server time, while the levels people were talking about on a forum I followed used the Tokyo session only. On a lot of days the two highs were three or four pips apart, and the actual sweep usually went just beyond the higher of the two.

I now mark both and treat the space between them as one zone. When price goes through the whole zone and then closes back inside within my three candles, the reversal has been more reliable for me than any single line.