One way to identify key price points in the market is when the market sentiment is likely to lead change in the market/stocks short term direction or an acceleration of its current momentum. By using these key inflection points we could read market sentiment and anticipate a market or stock’s next move.
Normally the first 5 minutes or 30 minutes or even rhe first hour of trading, traders or investors are reacting to any previous day or overnite news, This made such opening period emotionally charged and informationally rich. Therefore, there are a lot of potential reasons for the flurry of trading activity that occurs when the market opens. The initial flurry of activity will generally settle down by the end of 5 min to one hour.
I like to define the flurry activity as the opening range (OR) , and I refer the first 30 min as the OR. The OR is basically the price high and low for the day let say 9.am for Bursa Malaysia or at 9:30 am for FCPO. The OR is like a price discovery period. The battle between bulls and bears in the morning will often determine the significant price levels for the rest of the day
The most basic application of OR is when price trade above the OR’s high we are in bullish bias and if price below OR’s low we should have a bearish bias.
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