Playing the opening gap.

Discussion in 'Strategy Development' started by Bitstream, Sep 6, 2005.

  1. I've been closely monitoring for some time reaction from indices to big gaps at the open.

    Almost everytime there's a big gap-up you'll see some follow through and after a couple of hours of rally the HOD are reached and NEVER touched again.

    After that a retracement begins that usually last for 3-4 hours and it can drive the index underwater.

    Underwater or not, 1-2 hours before EOD, index rises again although not back to previous highs.

    This is a pattern that I notice some time ago and I saw it reoccurring anytime there was a big opening gap.

    For example DIA fut is up 50 points right now.
    I would expect it to rally up to 80 points, then retrace and fill the gap, giving back almost all gains. At the LOD, the index turns around and near session-end it rallies to close up 10-20 points.

    Anyone noticing this and taking advantage?
  2. I will have too admit that I have not been taking advantage of the happening, but I have noticed it also. The thing that concerns me this time is a large spike could put most of the indexes above their down channell top trend lines. If this happens,,,,, it could generate quite a bit of buying???? Just a thought....:confused: