With more drama in euro-zone, events over the weekend impact the markets dramatically at the open. Recent elections in France and Greece were an excellent example, and certainly not the last one. These gaps have interesting characteristics to be aware of, not only if you trade the markets at the open. Markets reopen in Sydney’s morning time. Volume is very thin but trading is very active. Reactions to the news can be strong and choppy. EUR/USD Weekend Gap May 7 - Click image to enlarge If your analysis (fundamental, technical or both) doesn’t justify this gap, the early hours are a good chance to act. If the gap will close, there is a higher chance it will happen before Tokyo joins in. Things begin stabilizing around midnight GMT, when Japan joins. The session in Tokyo adds more volume. At this point, the gap might have already closed, or it can begin drifting in towards a close early in the Asian session. A close of the gap means that the news was surprising, but not enough to totally change things. Gaps tend to close: the mass of market participants tends to send prices back to where they were on Friday before taking a new direction. If this doesn’t happen in the Asian session, the chances of a gap close in the European session is already much lower. If the gap isn’t closed, this is certainly a sign that things are changing and a new trend is taking shape, depending on events of course. Example The results of the French elections were predicted, but still euro negative. The Greek elections resulted in a political deadlock which was worse than expected. Sydney and Wellington opened with a big weekend gap that sent EUR/USD below 1.30. As gaps tend to move towards closure, the pair moved back up, yet also after the US session and some promising news from Spain, the gap was not closed. Are we set for a big move down in this case? We shall see. Further reading: 5 Most Predictable Currency Pairs – Q2 2012 The problems in Greece and Spain can certainly produce more gaps in the near future. Yohay Elam Yohay Elam Yohay Elam: Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I've accumulated. After taking a short course about forex. Like many forex traders, I've earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I've worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts. Yohay's Google Profile View All Post By Yohay Elam Basics & IndustryForex Basics share Read Next Forex Daily Outlook May 9 2012 Anat Dror 11 years With more drama in euro-zone, events over the weekend impact the markets dramatically at the open. Recent elections in France and Greece were an excellent example, and certainly not the last one. These gaps have interesting characteristics to be aware of, not only if you trade the markets at the open. Markets reopen in Sydney's morning time. Volume is very thin but trading is very active. Reactions to the news can be strong and choppy. [caption id="attachment_35482" align="alignright" width="400" caption="EUR/USD Weekend Gap May 7 - Click image to enlarge"][/caption] If your analysis (fundamental, technical or both) doesn't justify this gap,… Regulated Forex Brokers All Brokers Sponsored Brokers Broker Benefits Min Deposit Score Visit Broker 1 $100T&Cs Apply 0% Commission and No stamp DutyRegulated by US,UK & International StockCopy Successfull Traders 9.8 Visit Site FreeBets Reviews$100Your capital is at risk. 2 T&Cs Apply 9.8 Visit Site FreeBets Reviews$100Your capital is at risk. 3 Recommended Broker $100T&Cs Apply No deposit or withdrawal feesTrade major forex pairs such as EUR/USD with leverage up to 30:1 and tight spreads of 0.9 pips Low $100 minimum deposit to open a trading account 9 Visit Site FreeBets ReviewsYour capital is at risk. 4 T&Cs Apply Visit Site FreeBets ReviewsYour capital is at risk. 5 Recommended Broker $0T&Cs Apply Trade gold, silver, and platinum directly against major currenciesUp to 1:500 leverage for forex trading24/5 customer service by phone and email 9 Visit Site FreeBets ReviewsYour capital is at risk.