Trading Near the Bells Part 1: The OpenWelcome to our 2-part series on how to trade the two most intense, liquid, and volatile periods of the trading day: the open and the close. These moments bookend the trading session and are critical for traders who thrive on fast-paced environments.
In Part 1, weβll focus on the openβthe first hour after the market bell rings. We will explore why this period offers unique trading opportunities, examine key price patterns, and discuss proven strategies for capturing profit while managing risk during this high-volatility window. From gap trading to opening range breakouts, understanding the open is essential for those looking to capitalise on the rush of liquidity and order flow at the start of each session.
The Significance of the Open
The open is often the most critical time of the trading day. It sets the tone for the session as market participants react to overnight developments, including earnings reports, geopolitical events, and economic data releases. The first hour of trading typically sees a surge in volume as traders place orders based on these new inputs, creating significant liquidity and volatility. This influx of activity can result in sharp price moves, offering traders the chance to capture quick profits.
Additionally, the open provides vital clues about market sentiment. The price action within the first 30-60 minutes can hint at whether the market will experience a trend day or a range-bound session. Understanding how to interpret and trade this period effectively can give traders a strategic edge, allowing them to capitalise on these early movements while managing risk appropriately.
Three Strategies for Trading the Open
1. Gap and Go
The "Gap and Go" strategy focuses on stocks or indexβs that gap up or down significantly at the open and continue to move in the same direction. This strategy works best when the gap is backed by a fundamental catalyst, such as a strong earnings report, positive economic data, or a major news announcement. Gaps that are supported by solid news or events tend to continue in the same direction as they attract significant buying or selling pressure.
Additionally, this strategy is most effective when the price is breaking out of a period of compression or a key level of resistance. For instance, if a stock has been consolidating under a major resistance level and gaps up on strong earnings, it is likely to trigger further buying as traders who were waiting for the breakout jump into the trade.
β’ Key Setup: Look for gaps backed by a catalyst and breaking out of key technical levels.
β’ Entry: Enter in the direction of the gap if the price holds above or below the opening range.
β’ Stop-Loss: Set your stop near the gap level or below the opening range to protect against a quick reversal.
Example Gap and Go:
In this example, the S&P 500 gaps above both a descending trendline and a key resistance area at the open β backed by inflation data that had come in lower than expected. The gap holds within the first hour and continues to rise throughout the session, demonstrating how the early price action set the stage for the rest of the day.
S&P 500 5min Candle Chart
Past performance is not a reliable indicator of future results
2. Opening Range Breakout (ORB)
The Opening Range Breakout strategy involves identifying the high and low of the first 15-30 minutes of trading and looking for a breakout beyond this range. This strategy works best when the breakout aligns with the broader market trend. If the larger trend is bullish and the stock or currency pair breaks above its opening range, it indicates that the market is continuing in the direction of the prevailing trend, providing a higher probability trade.
β’ Key Setup: Works well when the breakout is in line with the bigger picture trend.
β’ Entry: Enter long if the price breaks above the opening range with strong volume, or enter short if it breaks below.
β’ Stop-Loss: Place stops just inside the opening range to protect against false breakouts.
Example ORB:
In this scenario, the S&P 500 establishes a clear range within the first hour. A decisive break below this range leads to a cascade of selling pressure, indicating how the breakout set the tone for the rest of the session.
S&P 500 5min Candle Chart
Past performance is not a reliable indicator of future results
3. Gap Fade
The Gap Fade strategy involves trading against the initial gap, assuming the move is overextended or lacks a fundamental catalyst. This strategy works particularly well when the gap occurs without significant news or events to justify the price movement. Traders using this approach bet that the market has overreacted to the gap and that the price will reverse and "fill" the gap by moving back toward the previous day's close.
Additionally, this strategy is effective when the gap coincides with a trend that has become extended on higher timeframes, suggesting that the market is due for a correction or reversal. For example, if a stock gaps up but has been in a prolonged uptrend and appears overbought on the daily chart, it may be primed for a pullback.
β’ Key Setup: Best used when there is no significant catalyst behind the gap and when the trend is extended.
β’ Entry: Short-sell if the gap appears overextended and lacks momentum, aiming to catch the reversal.
β’ Stop-Loss: Set your stop above the high of the opening range for shorts (or below the low for longs) to limit losses in case the move continues.
Example Gap Fade:
In this example, the S&P 500 gaps higher but stalls at a key resistance area. The market fails to continue higher during the first hour, leading to a break below resistance and a downtrend for the rest of the session.
S&P 500 5min Candle Chart
Past performance is not a reliable indicator of future results
Conclusion
The market open is a dynamic period full of opportunity for traders who are prepared to act quickly. Whether you prefer trading with the momentum of a Gap and Go, riding the trend with an Opening Range Breakout, or fading an overextended Gap, understanding the unique characteristics of the open is a crucial element of short-term trading. By using these strategies and adjusting them to the day's market conditions, you can navigate the volatility of the open with confidence and precision.
In Part 2 weβll dive into trading the closeβthe other bookend of the trading day with its own set of challenges and opportunities.
Disclaimer: This is for information and learning purposes only. The information provided does not constitute investment advice nor take into account the individual financial circumstances or objectives of any investor. Any information that may be provided relating to past performance is not a reliable indicator of future results or performance. Social media channels are not relevant for UK residents.
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USA500 trade ideas
A Powerful 3 Step Trading SystemThe return of the rocket booster strategy
--
Now it's very simple.
But first, before you learn this strategy
You need to understand that markets
move in cycles
and these cycles don't always happen
That is why when
you start trading you need to be very patient
So ideally you should be sitting on cash
before you deploy it.
yes inflation will bite your butt
as you wait but that's the price of entering
a good trade..
Think of it as the price to invest.
The rocket booster strategy is very easy
and its comprised of 3 steps:
#1-The price has to be above the 50 EMA
#2-The price has to be above the 200 EMA
#3-The price has to go up in a trend.
With the 3 steps, you can see that the SP:SPX
has followed these exact same steps.
Learn more about this strategy rocket
boost this content.
Disclaimer: Trading is risky you will lose money whether
you like it or not.
Please learn risk management and profit-taking strategies.
[SPX] The sucker move on S&P 500suckΒ·er punch
/ΛsΙkΙr pΙnCH/
an unexpected punch or blow.
So, there's sucker punch, and there is sucker move. Here's one of sucker move on SP:SPX , and I hate this kind of move. The price kind of enjoying the red journey & suddenly move to opposite direction in big way. So, is crash still on agenda ?
Well, this one for me is kind of neutral for now as the weekly is basically not bearish yet, but the daily is kind of tantrum right now...yeah it wants to go lower, but it's not....lot of sucker moves. Maybe let it made its mind first.
On the weekly chart, it's bearish if the price breaking 26 week EMA, or the MACD is breaking the support, otherwise it might just buying time until the election night.
SPX500 Resistance Ahead!SPX500 is making a bullish
Correction and will soon
Hit a horizontal resistance
Level of 5492.01 from where
We will be expecting a
Further move down !
SP500 $6000+ ALL TIME HIGH INCOMING From our previous analysis in June 2023 when will call VANTAGE:SP500 bull run to the upside this trend isnβt showing signs of weakness yet we might see another ATH of $6000+ extension
Possible Triangle Correction - Which would be Wave 4I am seeing what I consider could be a triangle correction along an ABCDE pattern on SPX (chart 2).
Or at least a standard compression correction along an ABC (chart 1).
As we know, in Elliot Wave, you only get triangles in Wave 4.
So I am pondering if we are about to see a big run up to Wave 5 which would melt-up the SPX to 6000 or higher (I'm not actually sure what degree this would be).
Comparative Analysis: S&P 500 & Federal Funds Rate 1998 vs 2024A Comparative Analysis: S&P 500 SP:SPX and Federal Funds Rate - 1998 vs. 2024
Historical Context:
(the lower chart S&P 500 and federal funds rate development 1994-2004)
1998:
- On September 29, the Federal Reserve began lowering the federal funds rate from 5.5% to 5.25%
- The interest cuts fueled the tech bubble, leading to a sharp rise in the S&P 500 over the next two years
- By 1999, as the Fed started increasing rates again, this contributed to the bursting of the tech bubble in 2000
Current Scenario:
(the upper chart S&P 500 and federal funds rate development 2020-2030)
2024:
- The federal funds rate now stands between 5.25-5.5%
- Anticipation is high for a rate cut on September 18, possibly by 25 or 50 basis points, mirroring the scenario of 1998
- Today, instead of a tech bubble, we're witnessing the emergence of an AI bubble
Future Speculations:
- AI Bubble Expansion: With the FED potentially lowering rates, this could accelerate the AI bubble, propelling the S&P 500 to new heights over the next 1-2 years
- Inflation Concerns: Lower interest rates might reignite inflation by 2025. If history repeats, the Fed might then hike rates again, risking a burst of the AI bubble post-2025
Conclusion:
While this analysis draws parallels with historical data, it remains speculative
However, the pattern aligns with economic cycles, particularly the 18-year property cycle and the broader economic super cycle that began in 2008
-> Do you think this scenario is realistic?
New York Session Recap - SPX500, NAS100Took 2 trades in New York Session. Trend Retracement setup on SPX500 and NAS100.
S&P 500 Poised for Bullish Move Ahead of CPI ReportS&P 500 Technical Analysis with Inflation Data:
U.S. futures remain steady ahead of the highly anticipated CPI report. The market is expected to be highly sensitive to the results. Current projections suggest the CPI will be around 2.5%, which would signal a weakening USD, potentially driving indices into a strong bullish trend. However, if the CPI comes in above 2.7% or 2.8%, the market movement could become unpredictable, with a possible downward shift.
The S&P 500 is currently trading above the pivot line of 5,453, with potential upside targets at 5,526 and 5,573. Conversely, if the price falls below 5,453, it increases the likelihood of a move toward 5,412, particularly if the CPI exceeds 2.7%.
Key Levels:
Pivot Point: 5460
Resistance Levels: 5525, 5573, 5616
Support Levels: 5436, 5412, 5360
Expected Trading Range: 5412 - 5573
Trend: Bullish as long as the price remains above 5,453.
Bulls and Bears zone for 09-11-2024S&P 500 has posted back to back gains this week since the pullback last week.
Patience is the virtue.
Level to watch : 5501 --- 5499
SPX500 9/11/24πΉ Indices:
ποΈ Outlook
Daly Bias: Bullish
Tokyo: Distribution into accumulation
London: Accumulation heading towards Tokyo highs
New York: We are opening inside the london and tokyo range. We also have CPI in about 2 min so we just wait for that to clear then look for longs.
Keeping an eye on this. ποΈ
SPX - Clear View to All Time High? Not so fastGood morning nerds!
Alright, quick 5 minute update on SPX. There's a motto for the update today and that is "We are not out of the woods yet!"
We've seen a decent move the last two days off the 5400 test last Friday but even though it looks decent, a lot still needs to happen. We're still trading below the 21 day exponential moving average in a month that tends to be bearish or at least corrective. A bullish August into a bearish September seems to rhyme with prior price action from previous years.
Ideally a move back to test that 5400 level would be preferred before a move back to ATH, however if we happen to get back into the distribution zone before retesting 5400, then it's likely we will move to 5800 and probably higher. If we get back to 5322-5400 beforehand, then that 5800 target by EOY becomes more realistic.
You gotta let the market breathe and especially in these months, you need to be a little more conservative with your positioning solely based on the season that we are in.
2yr Yield - FEDFUNDS "Inversion"Over the past ~25yr, we've seen 3 instances of 2yr Yield dropping below the FEDFUNDS rate set by the Federal Reserve.
All 3 instances coincide with Recessions.
On this chart, you see the Yield Differential (Yellow), the SPX (Candles), along with the time of said "Rate Cycle Inversions" (Blue Bar Counts Below Price).
As you can see, all 3 previous instances lead to significant corrections and/or volatility with notable downside.
Not since the 2008 "GFC" have we seen an "inversion" of this magnitude. While correlation is NOT causation...It can be a "warning light" signaling 'Danger Ahead'. It is certainly forewarning us that the probabilities of a recession/down-turn are gaining momentum.
Yes, people have been calling for Doom n Gloom, "Top is In", Recession imminent... for a couple years now. And I am not recommending you sell everything and hide under a rock. What I am recommending however, is that you reduce leverage if you have any, perhaps lock in some profits while you're "on top", and head into the coming days/weeks/months with eyes wide open, alert to potential quick corrections when this wild ride inevitably 'ends'.
Each instance resulted in the "recent lows" being violated. If history rhymes this time, that could mean low 3k's incoming for SPX. COULD. Can your portfolio/strategy/mindset handle that kind of volatility/drawdown? Just some food for thought.
As always, good luck, have fun, and practice solid risk management.
Thank you for your time and consideration.
Sell OpportunityTrading Signal: S&P 500 Index
Action: Sell
Entry Price: 5496.00
Take Profit: 5340.00
Stop Loss: 5565.00
Rationale: The S&P 500 index is currently positioned for a sell trade based on technical analysis indicating potential downside momentum. The entry point is set at 5496.00, with a take-profit target of 5340.00 and a stop-loss at 5565.00 to manage risk.
Disclaimer: Trading signals are for informational purposes only and should not be considered financial advice. Traders are advised to conduct their own analysis and consider risk management strategies before executing trades.
SPX500USD 2024/09/11one of the benefits of using Elliot Wave is that it can help traders to understand the psychology and emotions behind market movements. if can halp traders to avoid being influenced by fear and greed and trade with logic and objectivity.
-You can't control the market! But you can control how you respond it
# Planning is the key element of trading! Plan it - Follow it! Trade it!
SPX Buy forecastS&P 500 INDEX New forecastπ¨βπ»π¨βπ»
Note:
Follow proper risk management rules. Never risk more then 2% of your total capital. Money management is the key of success in this business...... Set your own SL & TP.
Please support this idea with a Like and COMMENT if you find it useful click "follow" on our profile if you will like these type of trading ideas delivered straight to your email in the future.
Thanks for your continued support!! lemme know your thoughts in the comment sec...
ArabianSimple idea to scalp spx short dated contracts.
Scalping through levels using the the help of fast and slow emaβs
SPX Update - Good CPI Scenario worked outHello traders!
Today I update the idea I shared on 13th Aug.
On 13th Aug i highlighted 3 scenarios (1 on tradingview considering bad CPI, 2 on telegram considering mid and good CPIs)
SPX followed the bullish scenario (green) - after CPI Aug release.
Market is really weird, personally I think that Inflation cuts will lead to lower levels if 50bps (because it would mean that US economy is really bleeding, bearish short term) - while would lead to a full bullmarket if 25pbs.
Right now we are holding and hedging position on BTC - which replicates SPX movements.
Buy Spot at 55235$ - Short at 60465$
Waiting for retest + confirmation to close the "wrong" alignment. - Saving our convenient buy (and planning others at lower levels) is our highest priority.
Send a DM for private channel.
How to Optimize Your Investments and Navigate Economic SeasonsThe economy operates in recurring phases of expansion and contraction, known as business cycles or economic cycles. These cycles play a fundamental role in shaping economic activity, employment, and investment decisions. In this article, we will explore the different phases of the business cycle, relate them to the seasons of the year, and discuss how investors and businesses can navigate these cycles effectively.
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A business cycle refers to the fluctuation of economic activity over a period, encompassing periods of growth and decline. It is measured through changes in key economic indicators such as GDP (Gross Domestic Product), employment, consumer spending, and industrial production.
Business cycles typically follow a regular pattern, starting with a phase of expansion, followed by a peak, a period of contraction or recession, and eventually a trough, after which the economy recovers and the cycle begins anew.
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Each phase of the business cycle can be compared to a season of the year, which provides a helpful way to visualize the economic conditions at play:
Spring (Recovery) : After the trough (winter), the economy enters a phase of recovery. Like spring, it's a time of renewal, with growth resuming and businesses beginning to thrive again. Employment rises, consumer confidence improves, and investment increases.
Summer (Expansion) : The economy reaches its full strength during the expansion phase. Just like summer brings warmth and energy, this phase brings rising consumer confidence, employment, and production. Companies grow, and investments yield high returns.
Autumn (Weakening) : As the cycle peaks, the economy starts showing signs of weakening, much like the cooling of autumn. Consumer spending and business growth slow down, and inflation may rise. The peak signals that the economy is at its maximum potential, and a slowdown or contraction may follow.
Winter (Contraction or Recession) : In winter, the economy enters a recession, characterized by declining economic activity, falling production, and rising unemployment. Just as winter halts natureβs growth, a recession slows down economic growth. This is the time when businesses may suffer losses, and consumer confidence weakens.
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Business cycles affect various sectors of the economy differently. Some sectors, like consumer discretionary and industrials, tend to perform well during expansions but suffer during recessions. Others, such as utilities and consumer staples, may be more resilient during downturns, as they provide essential goods and services.
For example:
Technology and Manufacturing : These sectors are highly sensitive to business cycles and tend to flourish during periods of expansion due to increased consumer and business spending.
Healthcare and Utilities : These sectors often remain stable during recessions because demand for healthcare and essential services remains constant.
Crypto Sector:
SP500:
π΅π½π°π
πΈπΆπ°ππΈπ½πΆ π±πππΈπ½π΄ππ π²ππ²π»π΄π π°π π°π½ πΈπ½π
π΄πππΎπ
Investors can use knowledge of the business cycle to adjust their portfolios. During expansion phases, growth stocks and cyclical industries may offer better returns.
Risk-On vs. Risk-Off Investing in Different Business Cycle Phases
During periods of economic expansion (summer), the environment is often referred to as "risk-on." Investors are more willing to take risks because economic growth drives higher returns on riskier assets, such as equities, growth stocks, or emerging markets. As consumer confidence, business spending, and investments increase, the potential rewards from higher-risk investments become more appealing.
Example of risk-on and off of cryptocurrency
Example of risk-on and off of Stock Market
However, during periods of economic contraction or recession (winter), investors typically shift to a "risk-off" strategy. In this phase, they seek to protect their capital by moving away from high-risk assets and toward lower-risk investments like government bonds, blue-chip stocks, or cash. The focus shifts to preserving wealth, and risk-taking is minimized or eliminated.
Investors may use leading and lagging indicators to anticipate where the economy is headed. Leading indicators, such as stock market performance or consumer confidence, tend to signal changes before the economy as a whole moves. Lagging indicators, like unemployment or corporate profits, confirm trends after they occur.
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π΄ππ½πΌπ΄π½π πΏπΎπ»πΈπ²πΈπ΄π π°π½π³ π±πππΈπ½π΄ππ π²ππ²π»π΄π
Governments often intervene to smooth out the extremes of business cycles through fiscal and monetary policy. During recessions, governments may implement stimulus packages, cut taxes, or increase spending to boost demand. Central banks may lower interest rates to encourage borrowing and investment.
Conversely, during periods of rapid expansion and inflationary pressure, governments may raise taxes or cut spending, while central banks might increase interest rates to prevent the economy from overheating.
π΅π²πΎπ½π²π»πππΈπΎπ½
Business cycles are a natural part of economic activity, influencing everything from consumer spending to corporate profitability and investment strategies. By understanding the phases of the business cycle (or seasons of the economy) and their impact on various sectors, investors and businesses can better position themselves to navigate economic fluctuations.
Whether the economy is expanding or contracting, being aware of the current phase of the business cycle helps guide decisions, manage risks, and seize opportunities.
SPXBe careful
T= 4600
Be careful
The relative strength index (RSI) is a popular momentum oscillator introduced in 1978.
The RSI provides technical traders with signals about bullish and bearish price momentum, and it is often plotted beneath the graph of an assetβs price.
An asset is usually considered overbought when the RSI is above 70 and oversold when it is below 30.
The RSI line crossing below the overbought line or above oversold line is often seen by traders as a signal to buy or sell.
The RSI works best in trading ranges rather than trending markets.
