I've traded gold for ten years, and the London session is the one I value most. The Asian session usually ranges between $5-8, like yesterday from 2330 to 2338, forming a small box. In the half hour before the London open, I always look at the high and low of this box first, because it's often a breeding ground for false breakouts.
False Breakouts and Pullbacks at the London Open
The London open is at 15:00 Beijing time (16:00 in winter). I usually wait for the 15:00-15:30 half hour to observe how price reacts to the Asian range. For example, yesterday the Asian high was 2338 and the low 2330. At 15:05 price spiked to 2341, looking like a breakout, but I don't chase. Because the first breakout at the London open is false six out of ten times. My approach is to wait for a pullback: if price spikes and then falls back, finds support around 2338 (the Asian high), and prints a bullish candle (like a hammer on the 15-minute chart), then I consider going long. Stop loss at 2335 (3 dollars below the Asian high), target 2345-2348. Position size 0.5 lots, stop 3 dollars, risk $150, which is 1.5% of my account.
I developed this habit after taking losses. In 2019, the London open broke directly above the Asian high, I chased long with 0.8 lots, but price reversed quickly. My stop was 2 dollars, but slippage caused a loss of over $200. Later I analyzed three months of data and found that only 35% of breakouts in the first 30 minutes extended more than $10. So now I don't chase the first move; I wait for a pullback confirmation.
Filtering Noise with Candlestick Patterns
The second key point in the London session is 15:30-16:00, when European traders come in and volatility picks up. I like to look for pin bars (long wicks) or engulfing patterns during this time. For example, the day before yesterday, price ranged between 2335-2342, and at 16:10 a bullish engulfing appeared on the 15-minute chart, closing above 2340. I entered long, stop at 2336 (1 dollar below the engulfing low), target 2348. The risk-reward was about 2:1, and I manually closed at 2346 because I was worried about profit-taking before the US session.
I don't use many indicators, but I watch volume changes. After the London open, volume usually increases 30%-50% compared to the Asian session. If volume doesn't increase significantly on a breakout, I tend to think it's a false breakout. Also, I pay attention to price action at key round numbers like 2340, 2350, where institutional orders often cluster.
Mistakes I've Made and Adjustments
The biggest mistake was overtrading. The first two hours of the London session are volatile, and I once wanted to enter on every candle, resulting in consecutive losses. Later I set a rule: no more than two trades per day in the London session, risk no more than 1.5% per trade, and only act when price pulls back to a key level (like the Asian high/low or the previous day's high/low). This rule has kept me out of a lot of junk trades.
Another mistake was ignoring position adjustment before the US session. The London session close (17:30-18:00) often sees profit-taking, causing price to give back intraday gains. Now I tighten stops or take partial profits after 17:00 to avoid giving back profits. For example, last Friday I went long at 2338, price rallied to 2346 at 17:20, I closed half and moved the stop on the rest to 2339. Then at 17:40 price pulled back and hit the stop, but overall I still profited.
Overall, the core of London session gold price action is identifying false breakouts and pullback confirmations. I don't predict direction; I wait for the market to give a signal, then test with a small stop. It's not rocket science, but it requires patience and discipline.