We’ve had some focus in recent weeks on traps occurring right at the market open.
Today… is NOT a trap at the open.
But it’s closely related. And expands upon the idea.
I’ve no trades to share for this one. With visitors, my trading has been limited this week. And this was one of two days with none at all. But in my post-session review (always completed whether trading or not) these setups jumped out at me and made today’s article topic a no-brainer.
Here’s the “Market Open Trap†concept discussed in recent weeks:
The key point, as it relates to today’s article, is the timing of the setup:
You know I love the market open. It attracts market participants across the full range of timeframes, from the smallest to the largest, leading to greater volume and often greater range of movement.
And from time to time it provides exceptional trap opportunity.
But it’s not the only timing which is highly visible and relevant to market participants, regardless of their timeframes and strategies.
Consider the 10:00 and 10:30 timings, marking the close of the opening 30 and 60 minutes respectively.
The close of one higher timeframe candle… and opening of the next.
With potential to form traps, should price break a significant level just prior to or immediately after the event.
Monday offered two textbook perfect examples.
The only thing better than a breakout of a significant level immediately after a key market timing… is a breakout of a significant level RIGHT BEFORE a key market timing.
No this doesn’t happen often. But it’s a feature you need to be aware of.
RULE OF THUMB: Treat as suspicious any SIGNIFICANT breakout occurring just before or immediately after a key market timing.
Project forward with multiple paths, for both acceptance and rejection of the breakout. Multiple IF-THEN scenarios, if you prefer.
Be prepared for either.
But perhaps, like me, you can secretly hope to exploit the trap-driven orderflow that comes from the breakout-failure trap scenario.
Happy trapping,
Lance Beggs