NDOG - New Day Opening Gap - Part 1
Introduction to New Day Opening Gap
In this module, the speaker discusses the concept of New Day Opening Gap and how it is not a random event. The opening price is offered to the market and whichever trade gets filled there starts the beginning of the new day opening gap.
Definition of New Day Opening Gap
- New day opening gaps are not a random event.
- The opening price is offered to the market and whichever trade gets filled there starts the beginning of the new day opening gap.
- Closing prices are not a random price event either so new date opening Gap uses closing prices from previous sessions.
Formation of New Day Opening Gap
- A new day opening gap forms every day Monday through Friday.
- If there is little separation between where we close at 5 pm and where we resume trading at 6 pm, then this pattern may not be an everyday event.
- A meaningful separation between two price points is preferred for a new day opening gap.
Utilization of New Day Opening Gap
- The new day opening gap should only be utilized for the week when it ends and we start a new week.
- Once that week closes, I'm not interested in that new day opening gap anymore.
- The very first new day opening gap will be utilized throughout the entirety of that week if it's meaningful enough.
Example
- An example was shown on Wednesday's 6 p.m. local time in New York.
- Price action respecting that new day opening up here as support was demonstrated.
Understanding Fair Value Gap and New Day Opening Gap
In this section, the speaker explains the concept of repricing to specific PD arrays when it touches them. They discuss how a fair value gap and new day opening gap can act as support or resistance levels for price movements.
Repricing to Specific PD Arrays
- When price touches a specific PD array, it may reprice to that level.
- This does not necessarily mean that it will act as support and go higher. It could also go down and find confluence with other levels.
- The speaker gives an example of an old new day opening gap low acting as a confluence level.
Fair Value Gap
- A fair value gap is a buy-side imbalanced outside inefficiency.
- Optimal trade entry occurs when price drops from the fair value gap to touch the new day opening gap below.
- The speaker emphasizes that this is not a blind strategy but rather one that should be used in conjunction with other analysis concepts.
New Day Opening Gap
- The new day opening gap can act as both support and resistance levels for price movements.
- The speaker recommends looking for opportunities to scalp by trading up into and repricing the high of the new day opening gap during Asian sessions.
Bullish Breaker Trades
In this section, the speaker discusses bullish breaker trades and how they relate to previous support levels.
Bullish Breaker Trades
- Price rallies after hitting a bullish breaker trade.
- The bodies of candles tell the story while wicks do damage.
- Candles did not close below previous swing lows, indicating strong support at those levels.
Utilizing New Day Opening Gaps in Trading
In this section, the speaker talks about how to utilize new day opening gaps in trading.
Utilizing New Day Opening Gaps
- The speaker recommends using new day opening gaps as a supporting factor or resistance level for other analysis concepts.
- They suggest looking for opportunities to scalp by trading up into and repricing the high of the new day opening gap during Asian sessions.