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NWOG - New Week Opening Gap Part 2
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NWOG - New Week Opening Gap Part 2

Introduction

In this section, the speaker introduces the topic of finding real value in price action and explains how traders usually try to buy support and short resistance.

Understanding Price Action

  • Traders are usually trying to buy support and trying to short resistance.
  • Price should support or resist based on a logical reason, not some randomly selected level.
  • New week opening gaps act as a magnet for price, just like a draw on liquidity.

Opening Prices

In this section, the speaker talks about the importance of knowing what the opening price is on Sunday and how it's important to take that Sunday opening price and extend it throughout the entirety of the current trading week.

Importance of Opening Prices

  • The opening price is not random and can be used as a reference point throughout the week.
  • It's important to take that Sunday opening price and extend it throughout the entirety of the current trading week.
  • The entire new week opening gap high and low range will be projected in future weeks.

Closing Prices

In this section, the speaker talks about how closing prices are not random events and how they can be used to determine new week opening gaps.

Understanding Closing Prices

  • Closing prices are not random events.
  • The ICT new week opening gap is defined as the separation between two price points: Friday's closing price and Sunday's opening price.

Understanding New Week Opening Gaps

In this section, the speaker explains how to use new week opening gaps as a reference point for price action and how they can indicate trending or consolidating markets.

Using New Week Opening Gaps as Resistance and Support

  • The speaker shows how to extend the new week opening gap into future price action.
  • Price treats the new week opening gap as resistance and support.
  • Price gravitates back and forth around the new week opening gap but still respects it.
  • The market finds support, rallies away, consolidates around, and draws right back down into that new week opening gap once more.

Trending Signatures with New Week Opening Gap

  • A willingness to sharply move away from the current new week opening gap indicates a trending market.
  • If there is an unwillingness to move away from the current new week opening gap, then we are probably in a range-bound and consolidating market.
  • When there is a willingness to sharply move away from the current new week opening gap, it's likely that we're entering a trending model.

Consolidation Signatures with New Week Opening Gap

  • If price has an unwillingness to move away from the current new week opening gap, then we're probably going to be range-bound and consolidating.

Understanding New Week Opening Gaps

In this section, the speaker explains what new week opening gaps are and how they can be used to navigate price action.

Definition of New Week Opening Gaps

  • A new week opening gap is the difference between the closing price on Friday and the opening price on Sunday.
  • The shaded blue area on a chart represents the current new week opening gap.

Using New Week Opening Gaps to Navigate Price Action

  • When there is a convergence of multiple new week opening gaps in close proximity to one another, it can indicate that the market will enter into a range-bound environment.
  • Price tends to treat old and current new week opening gaps as magnets and will often re-test them before moving away.
  • Incorporating old and current new week opening gaps with other factors can give a better understanding of where price is likely to move.

Navigating Price with New Week Opening Gaps

In this section, the speaker demonstrates how to use new week opening gaps to navigate price action using an example from May 5th, 2023.

Example of Navigating Price with New Week Opening Gaps

  • On May 5th, 2023, there were two old lows where sell-side would be residing.
  • The market traded down below both of them and into an area considered fair value gap on daily chart.
  • The market gravitated around the current new week opening gap from March 3rd, indicating its importance as a magnet for price action.
  • By extending levels from March 3rd and March 5th throughout time, we can see how sensitive price action is to these levels.

New Week Opening Gaps

In this section, the speaker discusses new week opening gaps and their significance in trading.

Using New Week Opening Gaps

  • If there is a new week opening gap and it's likely to go higher, halfway point between the two of them is significant.
  • Keep track of several weeks and months of new week opening gaps on your chart.
  • Look at what new week opening gap extends through an area where you see price consolidations or clusters of price action.
  • Use a 60-day look back period to determine which new week opening gaps have formed in the last 60 days.

Importance of Data Range

  • The ipta data range involves looking back 60 days and casting forward 60 days from today's date.
  • As a developing student, aim to have at least five salient new week opening gaps on your chart.
  • The 60-day look back period has a major impact on analysis and how much data is used.

Validity of Fair Value Gap

  • A fair value gap that occurred within the last 60 days is still valid even if it has already been filled in.
  • The algorithm will refer back to and respect the same old level because of the time aspect incorporated in algorithm price delivery.
Video description

CFTC RULE 4.41 – HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN Trading performance displayed herein is hypothetical. Hypothetical performance results have many inherent limitations, some of which are described below. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. In fact, there are frequently sharp differences between hypothetical performance results and the actual results subsequently achieved by any particular trading program. One of the limitations of hypothetical performance trading results is that they are generally prepared with the benefit of hindsight. In addition, hypothetical trading does not involve financial risk, and no hypothetical trading record can completely account for the impact of financial risk in actual trading. For example, the ability to withstand losses or to adhere to a particular trading program in spite of trading losses are material points which can also adversely affect actual trading results. There are numerous other factors related to the markets in general or to the implementation of any specific trading program which cannot be fully accounted for in the preparation of hypothetical performance results and all of which can adversely affect actual trading results. U.S. Government Required Disclaimer – Commodity Futures Trading Commission Futures and Options trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don’t trade with money you can’t afford to lose. This is neither a solicitation nor an offer to Buy/Sell futures or options. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this web site. The past performance of any trading system or methodology is not necessarily indicative of future results. Trade at your own risk. The information provided here is of the nature of a general comment only and neither purports nor intends to be, specific trading advice. It has been prepared without regard to any particular person’s investment objectives, financial situation and particular needs. Information should not be considered as an offer or enticement to buy, sell or trade. You should seek appropriate advice from your broker, or licensed investment advisor, before taking any action. Past performance does not guarantee future results. Simulated performance results contain inherent limitations. Unlike actual performance records the results may under or over compensate for such factors such as lack of liquidity. No representation is being made that any account will or is likely to achieve profits or losses to those shown. The risk of loss in trading can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. If you purchase or sell Equities, Futures, Currencies or Options you may sustain a total loss of the initial margin funds and any additional funds that you deposit with your broker to establish or maintain your position. If the market moves against your position, you may be called upon by your broker to deposit a substantial amount of additional margin funds, on short notice in order to maintain your position. If you do not provide the required funds within the prescribed time, your position may be liquidated at a loss, and you may be liable for any resulting deficit in your account. Under certain market conditions, you may find it difficult or impossible to liquidate a position. This can occur, for example, when the market makes a “limit move.” The placement of contingent orders by you, such as a “stop-loss” or “stop-limit” order, will not necessarily limit your losses to the intended amounts, since market conditions may make it impossible to execute such orders.