Open in the Vicinity of Prior Day’s Low Support

 

Last Friday we looked at a couple of examples of Market Structure journal entries, one of which involved a weak emini Dow open in the vicinity of the prior day’s low. Let’s quickly review this example, and the lesson it offered.

If you want to review the whole sequence you can see it here: http://yourtradingcoach.com/trading-business/a-simple-step-to-becoming-a-better-trader/

But otherwise, let’s just look at one image which shows the important point – A market open in the vicinity of the prior day’s low offers exceptional R:R if testing the support level with weakness.

Weak test of prior day's low support 

It’s my hope that you did get time to read last week’s article.

And that you saw the value in placing that entry into your Market Structure journal, or at least some notes with regards to the lesson.

And if you trade the emini Dow, it’s my hope that this concept was fresh in your mind when Monday opened.

Because it happened again!  🙂

Let’s look at Monday’s YM charts…

Weak test of prior day's low support

Weak test of prior day's low support

Weak test of prior day's low support

Weak test of prior day's low support

Weak test of prior day's low support

Weak test of prior day's low support

Could the trade have failed? Absolutely! This is why we use an active trade management style, in an attempt to minimise risk and maximise opportunity as further data unfolds following trade entry.

But it’s a low risk entry with multiple R opportunity, in a great structural location.

This is a trade worth taking.

It is also a beautiful example of the IMPORTANCE of a Market Structure Journal.

Every session, find something of educational value in the charts.

Document it.

Study your journal often.

The lessons it provides WILL improve your decision making as you step into the uncertainty of future trading sessions.

Happy trading,

Lance Beggs

 


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YourTradingCoach - Admin

2 Comments to “Open in the Vicinity of Prior Day’s Low Support”

  1. Nathan says:

    Hi Lance:

    When you look @ the YM, (and ES, NQ or CL), are you primarily looking at only the US Market hours?

    For these markets do you use the Globex trading at all?

    On the other hand, for the currencies, do you use the London open in a similar manner?

    Thank you and have a good weekend,

    • Lance Beggs says:

      Hi Nathan,

      I actually display charts showing both perspectives – some with Regular Trading Hours only (pit session hours) and some showing the Extended Trading Hours. Sometimes one can give an important insight that is not present on the other.

      That being said…

      On first moving to the futures markets from forex my preference was for the 24 hour data, as that was common practice in the currencies that I’d previously traded. As time passes though, I’m finding that I more and more show a preference for pit session charts, incorporating opening range theory into my strategy as another way to assess the opening bias. The 24 hour data is becoming something that I consider pre-open, but don’t tend to look at so much once the market is underway.

      It’s important to note though that there is no right or wrong way. What is more important is consistency. Choose the option that seems to give you the best feel for the flow of the market – whether RTH, ETH or both.

      Currencies… I haven’t traded them for a couple of years now. They always showed 24 hour data. But yes, the London open is a key event and can be traded in a similar way to the emini’s using OR theory to assess initial UK session bias.

      Again… consistency is most important.

      Cheers,
      Lance.

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