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I struggle to reconcile these two modes of trading on open. I know things can change quickly on open, but still...
For example, in the attached diagram from 48D, at 10 min 38. Around A, the red rectangle that I added, the market is always in short because we've had two consecutive strong bear bars. But then immediately at B we are front-running a potential opening range breakout by going long.
Surely this is incredibly difficult to do?
I guess there are some clues that warn us of such reversals.
1. 3 bull bars (2-4) and the bear BO (box A) suggest that TR open is likely.
2. Yesterday's close was support. TR was even more likely. bar 10(doji) and bar 12(bull) were both attempts to reverse up from that support. Although 10 didn't trigger, 12 was still the second attempt to reverse up.
3. Maybe not valid but wedge on the bear leg (6-10-11)
4. Bulls buying 4C (close of 4) should be able to avoid a loss. They got out at 7. (see videos on BTC and STC) Some scaled in at 12H and got out where they took the first long.(13H = 4 C)
(Of course it's difficult to do! No need to be able to do it either. Just keep in mind that some skilled traders (or machines) will be fast enough to do that. That's how TR is formed in this case.)
5. Selling 9 close is good! 14L is where sellers of 9C got out. Some scaled in during 13 and got out at 14L with some profit from their second entry. Good to fade big bulls in TR.
Sellers of 9 were originally betting on good BO and MM down. That deep PB told them that they were probably still in a TR, so they traded accordingly by scaling in.
I can't scale in. I'm not fast enough to fade strong bulls up in TR. But at least in hindsight, I can see how BTC bulls and STC bears reacted. If you care more about them, I'm sure you can accept reversals more comfortably.
(about the BO above TR(which was BOM))
No need (but of course reasonable enough) to buy 17. Still possibly TR. If you are not confident, wait for FT. Bar 18 was bull FT so higher probability of good BO and MM up. There are many ways to enter a trade.
For traders using the RTH / day session chart, is the EMA accurate during the open?
Trading Price Action Reversals by Al Brooks
Chapter 17: Patterns Related to the Premarket
End of 2nd Paragraph:
"Traders who watch only the day session have to be aware that the moving average is often unreliable for the first hour or so."
"Traders who watch only the day session have to be aware that the moving average is often unreliable for the first hour or so."
I think that has to do with the difference between globex EMA and day session EMA
