Friday, January 13, 2012
Measured move of opening range
When the day opens with a clear trading range presented by multiple legs, there is a very good chance that any trend attempt away from it will at least attempt to turn back into the range due to the magnetic effect of the consolidation. Often, the trend will reverse exactly at the measured move of the opening range as shown today. If the reversal is successful, then it turns into a extreme of the day (XOD) 1Rev.
A successful XOD 1Rev will attempt to take out the other extreme of the day (b29) and will often result in a BP trend in the new direction. When the breakout attempt is during lunch hour, the pullback could be complex and drawn out (b29-46)
Sometimes, the attempt to turn back fails in a one or two legged move and results in a 1PB resumption of the trend move. The fewer the bars before the pullback, the higher the chances of 1PB resumption of the original trend.