No matter which market you are trading (crypto, stock exchange, or forex), there are days when charts produce flat candles (small bodies with small wicks).
The main reason is liquidity. But the question is, why is liquidity reduced on some days?
Liquidity Reduction Conditions
News :
If there is important upcoming news related to your forex pair, crypto currency, or asset, most of the time big money is waiting to trade after the news, not before or while the news is coming out.
And that’s the reason you see a low-volatility chart.
Holidays :
If there is an upcoming holiday, or it’s before or after one, big money may not trade and the chart goes into a flat shape!
Attention :
Especially in crypto and the stock exchange, you may experience that your asset loses attention.
No one mentions it, and a new trend comes out. And when an asset, or even a forex pair, loses retail attention, that means big money can’t do much of what they usually do (you know what I mean :D).
So losing attention equals liquidity reduction, and liquidity reduction is equal to what? Right, flat candles.
Something Big Is Coming :
There is a tale that says before a big move, there are quiet, silent moves. Mechanically, after each compression there is an expansion.
So be careful!
Season :
Some assets or pairs have specific seasons or times to trade. Like trading Doge coin at 2 AM UTC is not ideal! Or trading EURUSD in the Tokyo session is a fail move because EURUSD corresponds to Europe and the United States of America, and most traders of this pair are from those places. So when retail traders are trading less, what happens? Correct! Liquidity reduction.
Tabulated content!
| Condition | Explanation | Result on Chart |
|---|---|---|
| News | If there is important upcoming news related to your pair, currency, or asset, big money usually waits to trade after the news, not before or during it. | Low volatility, flat candles |
| Holidays | Before, during, or after major holidays, big money may avoid trading. | Flat chart structure |
| Attention | When an asset (especially in crypto or stocks) loses retail attention and no one talks about it, big money has less activity to work with. | Liquidity reduction → flat candles |
| Something Big Is Coming | Before a big move, the market often goes through quiet and compressed movements. After compression comes expansion. | Low volatility before breakout |
| Season / Session Time | Some assets or pairs perform better in specific sessions. Example: Doge at 2 AM UTC or EURUSD during Tokyo session is not ideal because main traders are inactive. | Lower trading activity → liquidity reduction |
Hassan Safari