Do you predominately use the o/n session or prior RTH session to determine market direction for the day? I'm thinking about how much the big boys position themselves before the opening bell (during European markets/economic releases) or if it's more a continuation of the prior day. I feel like I should start by understanding when/why the o/n high/low's are more significant some days than others. Any input is greatly appreciated.
Obviously, the U.S. equities RTH session is what matters and that for obvious reasons. I know a lot of guys were ignorant of this until after I enlightened them of this among certain other things. Look at where we open in relation to yesterday's cash close. Looking at ETH you may get an idea of where the market will open and you can start planning the trading day. When you get really good, you can even start exploiting the ETH session and position yourself for the open.
That is how I was approaching it - watching how price builds off itself at the open (in relation to the prior close and trend lines). Just hearing some chatter lately here on E.T. by folks looking to determine HOD/LOD sequencially so I thought it could be a 24 hr ebb and flow type thing I was missing. It's still difficult for me to take a direction for the day and just hold...dunno why, would make life easier but who wants that!
I start my day by checking the daily bars from past six months and draw trendlines, want to see where support or resistance will be and transfer those lines to my smaller timeframe charts. Then I do the same for day session only 60 minute charts and 24 hour 60 minute charts. I use all these trendlines to either take profit early, extend targets or not take opposing signals if price is going towards these trendlines for first touch. As far as yesterday 's close in relationship to today's open, the markets have become so worldwide so fast technology, chasing the gap doesn't give the edge it once did back in the 1980's. In recent times, last ten years, I can't find an edge of using yesterdays high/low to high enough degree to make it a part of how I trade. I do take the ten period average daily range and often times will not take signals when price is at extremes of these ranges. But as far at picking a direction in relationship from yesterday's close or overnite, no edge here for me. I am just not type of a trader that goes for homerun targets, am sure some are and might be successful at it, but testing I have done would require a stop that is what I be using for a long term trades.