Opening Gap Trade

The Regular Trading Hours (RTH) opening gap trade is a well known trading setup. This trading setup is certainly something I always consider at the opening of the new RTH trading session.

Guy did an analysis of this setup in his article titled "Fading the Gap"

From his article we learn the following historical statistics from the sample period he used...

• "On average 76% or three quarters of all gaps close at some point during RTH."
  
  
• Gaps on Monday were the least likely to fill and Thursday gap openings the most likely.
  
  
• Opening gaps up to 7 ES points in size were filled during the session at least 70% of the time. This probability drops off surprisingly quickly above the 7 ES point range.
  

Given these basic concepts as a foundation, I thought it might be helpful to use this topic for further discussion, analysis and trading ideas.

quote:

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Originally posted by BruceM

seems like your NQ market wants to fill in that nasty overnight gap down at the 1794 area.....perhaps my data is messed up...

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Close in the NQ yesterday was 1790.00

NQ so far has pulled back to support at 1800.00 and held (for the moment at least).

I will be surprised if we do close that gap in the NQ as it's almost 20 NQ points...anything can happen of course so time will tell...

I am working the long side off these obvious support levels:
NQ 1800
ES 1350
ER2 710

edit: as you mentioned the market seems happy to sell into rallies this morning, so long side trades need to be viewed as counter-trend for the time being... I am working this as a trading range scenario rather than a trending market ... thus: buy support / sell resistance...

quote:

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Originally posted by pt_emini

as the ES closes in on the gap fill, I a nibbling at a long here in the ES at 1351.50

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... taking profits on the ES long trade her at 1357.00 for a profit of 5.50 ES points

... also working NQ 1808.00 resistance level as a profit target, also working 714.00 resistance as a profit target in the ER2

markets hitting next resistance levels:

ES 1360.00
NQ 1810.00

well done PT!

I shorted the 59.25 area again...this is second time as we tested those selling tail prints...don't like the placement here though...over 62 will take me out

stopped out at 61.50,,trying again at 66.25...president bush owes me some money....

targeting 62.50....will need some luck here I think...68 - 72 is critical zone....volume in front of it will hopefully lead to selling

quote:

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Originally posted by BruceM

stopped out at 61.50,,trying again at 66.25...president bush owes me some money....

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1366.25 is an excellent entry point, for your sake I hope the sellers grab this breakout and toss it back into the range... definitely is going to be an interesting afternoon and close today...

quote:

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Originally posted by BruceM

targeting 62.50....

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very nicely done Bruce

thanks PT...I was watching that surge in volume with the TICKS diverging...interesting how they came back up to try and shake us out....58 is next target...it will be interesting to see how this reacts at the VA high..if it gets that far....keeping it tight as we just had a minus 900 on downside with increased volume...64 area needs to hold it back....

great gap play in the ES today. Huge rally sold near the R2 pivot to watch it gap fill and then some.WOOT!