Technical analysis seeks to find indications of changes in liquidity. Fundamental analysis seeks to find effects of liquidity changes. For example, a news release can be analysed to see what its effect might be. Firstly a news release can be expected to produce a marked increase in liquidity. So it is not liquidity per se which provides the basis for analysis. But nor is is directionality, because Forex is a complex market and these patterns which compose it have moves consisting of retracements, in effect waves of moves in and against a given direction, with varying momentum.
However market open and close have an effect on liquidity, which can directly affect momentum. The direction of momentum may be indicated by news events. Markets such as New York and London have marked increases in liquidity, which can be directed towards a preferred direction, based on the fundamental news prior to market open. What this means is that the run up to a market open can be a time when the market may push in a direction, evidencing candles which build, in patterns still of course consisting of retracements, though with the possibility of volatility.
For the trader who does not trade using automated trading methods, such as robots, then it matters when a session is. The best time to trade Forex can be based on the actual time a session takes place, and the type of trading used by the trader. For example, they may wish to trade the news. In this case, the session itself becomes less important that the nature of the news release, except that a prior news release can have an affect on latter sessions. News trading is a type of trading which in effect seeks to remove all considerations except the effect of liquidity and direction. The reality though is that a complex pattern may result.
During the session itself, after the surges of liquidity in the run up to it, which may produce volatility, then the market can produce its complexity, with pattern formation, and traders may wish to trade on this using technical analysis. However for a trader looking to trade on momentum, the run up to major market open can be a time to at least look for the formation of candles which build in a given direction. That is these times can strip away the problem of direction and complexity to some extent, consequent on prolonged surges in liquidity, like a news trade but extended in time, but very much contingent on time as well, in that the market open itself can radically change liquidity, as the market alters its landscape into a more complex one, perhaps driven by volatility.
Thus the best time to trade Forex depends on a wide range of factors, based on where the trader is, the times they can trade and the types of trading they will use. Roughly speaking, trading around and in a session such as New York, London or Tokyo can be more productive than trading between sessions. This said the trader may find trends and then ranges developing between sessions, as if from nowhere. There is a trade off between the action and disorder liquidity driven volatility brings and thus calmer markets can be productive as well.
