The weekly open and the Monday range as a liquidity reference

[Shadow Trader]

Most traders anchor on the daily chart, but weekly reference points quietly shape a lot of the movement on lower timeframes. The weekly open, the high and low of Monday, and the previous week's extremes all act as levels where orders collect. On many pairs I have seen price spend Monday building a range, then use Tuesday or Wednesday to sweep one side of it before the real directional move of the week begins. That is not a rule of nature, only a recurring tendency worth testing on your own pair. My routine is to mark the weekly open and Monday high and low on Sunday evening, then wait. If price sweeps the Monday low midweek and closes back inside with displacement, and the weekly bias supports buying, I treat it as a candidate long with a target at the Monday high or the previous week's high. If price breaks the Monday range and holds beyond it for several hours, I drop the reversal idea and think continuation. The point is to have a map before the session starts, so you are reacting to defined levels rather than inventing them when you feel pressure to trade.

[FXS HongKong Scalper]

The Monday range idea is interesting, and I've seen it work on EURUSD fairly often. In Asia the Monday open itself is the first event of the week, and sometimes the weekend gap sets the Monday range very early. When there is a gap, I mark the Friday close as well, since price often goes back to fill part of it before building the range. Have you found Monday ranges after a gap behave differently?

[Amanhasnoname]

I've been marking Monday's range on EURUSD and USDCHF for about a year, and I'd agree it's a tendency rather than a rule. In my notes, price swept one side of the Monday range by Wednesday in a little more than half the weeks. The weeks it didn't were mostly ones with a big event midweek, like a central bank meeting, where the range simply got blown away in one direction.

On the gap question, my experience is that Monday ranges after a gap are smaller and less useful. Price often spends the Asian session and the early London hours filling part of the gap, and that movement ends up defining one end of the Monday range. When I tested sweeps of a range like that, the results were noticeably worse than on normal weeks.

What I've added is the previous week's close as a fourth line. When the Monday low and the prior close are within a few pips of each other, a sweep of that area tends to be cleaner. I also stop using the Monday levels after Thursday, since by then the week has usually built its own structure.