Importance of the EMA at the Open

Here's the same chart with Al's markings, why did we BO below the Triangle on the Open? Because of Yesterdays' Low? Or because of the MA? Or... ?

Thanks

Hi Noah 

It's not uncommon for the market to enter a BOM just before a magnet, with a following BO to test that magnet. In this case it could be that when the PA got really tight traders stopped trading and the market quickly moved towards the area with more orders waiting ( a sell vacuum test). In this case this area was yesterday's low.

On a daily chart it means that the market dipped below the low of yesterday's candle and found more limit order bulls than stop order bears hence the reversal 

Hey Fred,

That's very interesting thank you. I looked back at my course notes, and I see what you're referring to was on Video 48E. And that played out on the charts, ie. we got at least a 2nd entry signal for the Failed BO trade up from Yesterday's Low. 

So if we weren't close to Yesterday's Low or High, would the MA have been more of a factor here? Or should we not use it all to give us some bias on how the Triangle will BO?

Thanks

You're welcome. I personally prefer to have a bias based on targets like MMs and daily and weekly Hs and Ls. The ema alone sometimes is not enough. There are instances where the Ema might act as a magnet, like in TR that keeps crossing it: as soon as the Market tries to get away gets immediately drawn back. Or a trend with repeated PBs to the ema, where traders keeps placing orders to go in the trend direction.

Let's say I have triangle forming below the EMA but I'm not able to see any target: the chance of BO in either direction is then  around 50/50. If I wanted to have a bias I would see the bears with a slight advantage, just because they've been able to keep the PA below the EMA, but that's about it. In the end it's just a personal bias and sometimes even though there's a clear target below a triangle, the market BOs in the other direction without even testing it