- Yesterday's candlestick opened lower but reversed to close as a big bull bar in its upper half with a prominent tail above.
- However, the market traded significantly lower after the market closed. The market will open lower than the March 13 low today.
- Again, the bulls hope buyers are below the gap down, similar to March 31st and yesterday April 2nd.
- They want any follow-through selling to be limited, and the market to trade up after that.
- The bears hope to get follow-through selling after a brief pullback. They want the market to close near its low.
- Usually, when the market is opening significantly lower, which means that there are a lot of sell orders at the open.
- The market makers have to quote a price they are willing to buy for the stocks that they are trading. Usually, that price is near the day's low.
- So, at the open, if you are buying stocks that are gapping down, you are buying with the market maker.
- After the market opens, if there is no fresh selling, the market may then slowly float up, letting the market maker slowly clear off their position (remember, they bought at the open, buying when everyone has put an order to sell at the open).
- However, if there is fresh selling, the market then may continue to sell off after a brief pullback. If this is the case, then it can be a bearish day.
- The reason is that the market maker has been caught long at the open, and the fresh selling continues to push prices past their entry.
- The next price they would want to buy would be much lower. So if there are fresh large selling orders in the respective stocks after the market opens, the market makers would bid a lot lower so that they are not run over by a freight train.
- For today, traders will see if buyers will buy the gap down open like they did on March 31st and April 2nd.
- Or will the market form a brief pullback, and then continue to selloff into the close? If this is the case, the market may not be in a good place moving forward.
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Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.