<<One of the setups I trade is to wait the first pivot to be made, and determine if the pivot is a higher low/high (from upward direction of previous day) or lower high/low (downward direction from previous afternoon). >>
exactly. that is crucial. this is what George
Taylor tried to do with the 'Taylor Trading Technique' -- determine if that morning extreme represented a significant high or low for the day. I think this is very similar to what you are doing Torero.
One way to think about it is to think about a diagonal line from the morning session to the afternoon session as the general theme for the day. Is a low being made 'first' or a high being made 'first' (which is the probable direction for the diagonal line)? Then seek supporting information for whatever thesis you come up with.
Bringing this back to the opening gap.. A gap down can be thought of as a slight bias towards thinking a low is being made first. A gap up can be thought of as a slight bias towards a high being made first. Even in many times when this is not the case, you will still get some directional action against the direction of the opening gap for a while and can be positioned for that 'play'. The clear exception is when the market gaps and then shows extreme trending action -- this is signalling potential trend day in the direction of the gap. This is when you need to be careful. Rashke says these happen about 2-3 days per month. But the market will 'fake' the trend day and instead reverse and make a high or low for the day probably 4 times for every trend day that actually does develop. Just have to find set-ups consistent with your thesis and watch your back so you don't get run over.
re Friday... this was big gap down with 'low made first' -- this is consistent with Market Profile that you would expect 'responsive buyers' on a move far below recent 'value'....
Thursday was also a gap down for a trade back up... but note that a high was made first (diagonal line down as the dominant 'theme' for the day). This is where the 'rhythm' of
Taylors work really comes in.. Look how the market made a morning low and an afternoon high (low made first) for 3 consecutive days prior to Thursday. You were 'due' for a down day as
Taylors concept calls for a 2-3 day cycle in the market where after 3 'low to high' days, you might be looking for a 'high' to be made first. Gaps definitely add to the complexity of this.