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Soultrader

Overnight Session: Looking at globex high & low

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On top of knowing where the previous days high and low is, it is important to watch for the globex high and low as well. These levels can act as key support and resistance point. One strategy is to go long at the globex low and short at the globex high.

 

Any break above the globex high is a long signal and any break below the globex low is a short signal.

 

One important pattern I have been seeing recently is whenever prices move below the value area during the overnight session just to have it pushed back into value. This level below the value low pivot acts as key support during the trading day.

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Here is a good example of an overnight support. The markets trade right below value low just to find support to push prices back into value.

 

Take a look at the long red bar at the far right edge of the chart. The tall wick shows price rejection below the value low pivot. This will be a key pivot to watch going into the trading session. If the premarket action does hold this pivot, this is a good indication that price will not trade below the value low pivot. Also, instead of shorting the break of the value low pivot, you need to understand the globex low made. This will act as support.

 

A safer setup to trade the break of the value low pivot is to short the break of the overnight low.

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After prices held the globex low at the value low pivot, we had clear indication that price was going to trade within or above value.

 

In this example, we had prices in a decent uptrend. Overnight session price acceptane vs rejection can act as key information to guide you in your trading day. Notice the 100+ rally from the value low pivot.

082806marketaction.jpg.dd2f40380eed086fbc68d60e8fb5cd3a.jpg

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What are the overnight session hours that you use to retreive the highs and lows?

 

The YM closes at 5pm eastern and halts to 6pm eastern. So I will take whatever low or high was made from 6pm onwards.

 

I'll usually take a look at the markets around 7:30am - 8:30am eastern and set my charts to a 24 hour chart. This pretty much shows me everything information I need. I will have my charts set to a 24 hour chart until 1-3 minutes before the open at 9:30am eastern. I will then set my charts to a gap chart.

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What about for markets that do not trade 24hours. Should I place the same level of importance?

 

If the overnight market do not trade above or below the previous days range, what does this indicate?

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What about for markets that do not trade 24hours. Should I place the same level of importance?

 

If the overnight market do not trade above or below the previous days range, what does this indicate?

 

1. If you trade stocks, premarket action is very important. Watch the overnight low and high carefully. They can act as key support and resistance.

 

2. If the overnight action remains within range there is not much change in market sentiment. This means that the market is in balance.

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This is the end result chart post for the day.

 

Notice the overnight support and value high pivot cluster became the dead low for the trading day.

 

This is the reason why I watch for overnight and premarket action to determine any key levels. This is always an edge.

083006deadlow.jpg.6b29ecaa94d71811abe2c261ef0694d5.jpg

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Could you please tell me how the value high/low is calculated?

 

Calculating the actual value area by hand can be very time consuming. I recommend paying for market profile data fees.

 

Listed below is from the CBOT Market Profile data vendor list:

 

http://cbot.com/cbot/pub/page/0,3181,1183,00.html

 

Source: Chicago Board of Trade

 

I will also post a thread on how to calculate the value area hopefully tomorrow. Will need to create it in excel format. I will keep you posted.

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On top of knowing where the previous days high and low is, it is important to watch for the globex high and low as well. These levels can act as key support and resistance point. One strategy is to go long at the globex low and short at the globex high.

 

Any break above the globex high is a long signal and any break below the globex low is a short signal.

 

One important pattern I have been seeing recently is whenever prices move below the value area during the overnight session just to have it pushed back into value. This level below the value low pivot acts as key support during the trading day.

 

I have always found that fading the overnight lows and highs is generally a decent scalp trade. Even if you're not much of a scalper, you generally want to avoid being short close to the low on the first test because you can get a very healthy bounce from there that shakes you out before you go lower. Obviously, vol being what it is right now it's a harder play to do sometimes.

 

A nice trade setup I found utilized the overnight highs and lows in conjunction with a composite or mash profile. If you open way below 3 or 5 day value, for example, and you test the overnight low and don't attract more activity, this is often a nice place to get long because moves back into value can sometimes carry all the way through it and one of those trades will make your week.

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I agree with ST and this threads title in the idea the overnight globex high and low "can be" areas of support or resistance. I attached screenshots of 12-23-08 and you can see on both the 5 min (on top) and a 1364Vol where price hits and retraces back after market open. The red vertical line is market open. Haul it!

5aa70ea3e4464_Screencapture10.thumb.png.b246b3c4392de3d847427bdfab18b9ff.png

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