Hey, Mike
There is a compelling logic to this particular time of day. The U.S. market opens at 8am, but it has its highest volume / highest volatility period between 9am and noon. Assuming that a surge in volume/volatility will be accompanied by a surge in price, this strategy attempts to catch that price surge.
About a year ago, I attempted to figure out how much forex volume was being traded hour-by-hour worldwide, but I just didn’t have enough information to generate hard numbers.
I did come to the conclusion that the bell-curve of trading volume in the U.S. is skewed heavily toward the morning hours. In the afternoon, things taper off rapidly. And it appears that the trading volume bell-curve for Europe and the U.K. (taken together as one market) has two humps: volume surges in the two-three hours immediately following the Zurich open; then, volume declines slightly until the New York open, when it surges again. A graph of forex volume in Europe/U.K. would be somewhat saddle-shaped. The second surge out of Europe/U.K. reinforces the morning surge out of the U.S.
Europe/U.K. (including Ireland) overall accounts for 56% of total worldwide forex volume. And North America (U.S., Canada and Mexico) accounts for 18.5% of worldwide volume. Combined, Europe/U.K. and North America account for 74.5%. This volume is spread over the 24-hour day, but it’s not spread uniformly.
Volume surges in the early hours of the European session, and in the early hours of the U.S. session, providing the opportunities we try to capture in breakout strategies like this one, and the various “London” breakout strategies we have been using.
That was the long-winded answer to your question. The short answer is that there is a good chance that the 9am EST candle will precede a nice price move. And, no, a candle chosen at random probably would not serve as well.
Clint