Trade the gap
Large gap down in the GBPJPY pair this Sunday at open, gapped down about 70 pips. What is a gap? A gap happens when price closes the week on Friday at a certain price but opens on Sunday at a much different price, meaning there was price action during the off hours over the weekend. The theory says that price gaps must be filled, so many traders will be poised at their buy/sell button at 5pm EST on Sunday when forex brokers open for trading to see if there is a gapped price compared to the closing price. If a major price gap is evident, they will trade in the direction of the gap hoping that price will retrace to close the gap. The GBPJPY is a perfect example of a great gap trade. Price opened at 205.90, and immediately started ascending in the direction to close the gap, closing price was 206.75. It only took nine 15minute candles to close the gap for about 75 pips. Be aware, price gaps do not always fill, in fact last Sunday a big gap occurred too, and was not filled. But I see these gaps filled more often than not, so do trade them with a good stop loss and you can end up winning much more than losing playing this strategy. Good trading!