forex-scalping.com

When the daily open and the London open disagree

Two opening prices get used a lot as intraday references. The daily open, at the New York close or midnight depending on who you ask, and the London open at 08:00 London. Most days they're close enough that it doesn't matter. Some days they're not, and that disagreement is interesting.

If Asia has moved price a fair way from the daily open by the time London starts, you've got two reference points pulling in different ways. Price above the London open but below the daily open, for example. One says buyers are in control of the session, the other says the day is still down.

What I tend to watch is which one price respects first. If London pushes back toward the daily open and reclaims it, the Asian move is being undone, and that often sets the direction for the morning. If London pushes away from the daily open and holds above or below its own open, the Asian move is being extended.

It's not a setup by itself. It's a way of reading the first hour. When both opens are on the same side of price, the picture is simple. When they disagree, I trade smaller until one of them clearly wins.

Defining the daily open consistently matters. I use the New York close.

Midnight open fans will have their own view on this. Some traders use the midnight New York time open instead of the 17:00 close, and on some days that gives a third reference sitting between the other two. More reference points aren't automatically better, though. Three nearby levels just means price is always near one of them. I'd pick one daily definition, test it for a while, and only add another if it clearly changes decisions on the days that matter. Otherwise you end up with a chart full of opens and no idea which one actually mattered on the day.