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Old 08-12-2007, 09:08 AM
Dogpile Dogpile is offline
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Re: Trading Morning Session After Significant Gap: Trader Beware

<<I find it more effective to use overnight resistance and supports instead of playing gaps.>>

Probably best to look at some examples and talk about specifics. My opening post was just to expect some emotional trading to hit as the cash market opens.

The overnight chart pattern will offer excellent clues and set up a workable structure to trade with.

Certainly one thing that helps is to think about how the last few days have traded and where the open is happening relative to recent structure. Thursday ended with trending action down with price closing 2 std devs below the days VWAP. Thus the 'profile' is 'trending away' from last accepted price (in the 1480's) which continued significantly in the overnight session with action down in the 1440's. At this point, either you are headed for total crash or a period of congestion or a move back up. My point here is just that betting on the crash is really tough location to initiate shorts.

Instead, congestion forms on the globex 24-hour chart and now you have a workable pattern to trade with. This is supported by the general tendency that after a significant gap, the market tends to trade back into the gap.
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Last edited by Dogpile; 08-12-2007 at 09:36 AM.
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