Market Profile Opening Types

Market Profile opening types and why they matter
The RTHRegular trading hours. The official opening and closing time... More session starts each day with an official open, during which a significant number of orders are completed in a short amount of time. The opening swing and price movement provide crucial information.
The location of the open is crucial, as it influences the type of opening. Openings inside balance, onOvernight Session More the whole, are less immediate and tend to either open auction or open test. Opens outside of range, onOvernight Session More the other hand, are more responsive. When trading outside of range, the market may achieve equilibrium after an open auction, but nothing can be predicted. The best tool to find early signals is to use price actionPrice action More and tape reading against recognised key markers to identify an early trading opportunity. This is a skill that takes years to master.
Rejection and support of prior important levels from the open can provide additional information to determine direction early, and by combining simple facts with the initial price actionPrice action More, you can develop a structured trade-off. The earlier we can put our trade plan into action, the smaller our risk.
Why does the open matter? An example:
The open can provide us early clues as to the intentions of the participants and therefore the day type. The faster market intention can be recognised the less risk we need to take to structure a great trade.
An example is an open near but below the prior day’s highs. An impulse up though the prior close tells me buyers are still willing to probe price higher to find sellers. A subsequent pull back to the prior close where I see absorption from buyers is a fantastic access point with a very clearly defined point of failure.
Open Drive
The market opens (usually below/above the previous day’s value range) and trends strongly.
When the market begins with an open drive, no prices have traded above or below the open.
As a general rule, it is not a good idea to fade these moves and you will ideally identify quickly from price actionPrice action More early onOvernight Session More that this scenario is playing out. Identifying features include impulsive moves with little or no pull back and slicing through key visual reference points with little or no counter-reaction. Followed by tight stair-stepping consolidation points.
Often after such aggressive open, the move reaches support or resistance level is found and a reversal may occur. A strong reversal pattern is needed to enter a counter open drive more.
This is a hard trade to execute as it’s often very abrupt. If you have no plan for this scenario in your daily prep it is almost impossible to execute and hold with any conviction. A best practice tip is to identify pre-open if the market structure is likely to test through a key reference point for example an open near the weekly lows and highs where larger stops may be lurking.

Open Test Drive
Similar to an open drive, but before the market drives it will quickly test a significant level onOvernight Session More the open before a significantly stronger counter-rotation. The test will usually be some key MGI such as the prior close or recent high or lows.
Once again very hard to trade without pre-market open planning. You need to clearly identify the areas where the test may take place and be mindful of the price actionPrice action More (PAPrice action More) to recognise the test and subsequent turn.
I am a big fan of this setup and trade as your risk is clearly defined and the PAPrice action More you are looking for is very specific to the key area. I am particularly fond of tests of prior closes from opening gaps More that are filled and fail within the first few minutes of the open.

Open Rejection Reverse
The market attempts to continue in a prior direction only for a strong opposing force to reverse the auction back the other way. Price opens above or below the previous day’s value area More but falls back.

Open Auction
The market opens with a lack of momentum in either direction typified by large and similarly sized counter rotations which result in little or no moment away from the opening price. This open is easily recognised and tends to be followed by a balanced day. This often happens when the market finds a temporary acceptance.
These are the bell curve-shaped profiles where you can scalp/daytrade around the edges of the value area More, see trading balance rules.

Conclusions
It is difficult and risky to monitor multiple instruments at the opening because the price moves so quickly. It’s best to stick to one product and use other correlated instruments for added conviction.
You need a clear plan and knowledge of the instrument’s key reference points where you can structure a trade. The use of some simple historical statistical probabilities can really help. Quickly identifying the open and understanding the probabilities of the day’s outcomes can be a great skill.
I hope you find this article interesting. If you would like to learn more onOvernight Session More how to trade using a market profile, and footprint please subscribe to the newsletter and visit me on YouTube where I am trading live most days. Or Subscribe and I will send you my daily journal.
Trade Well and Prosper BT