NYO Reversal Setup
The New York open is critical as it often determines the day’s overall direction. If the sentiment is bearish, it is rare for Asia and London to establish the day’s low – NY usually does that.
Key Points to Consider:
- Watch for a sudden spike in trading activity with a significant increase in open interest during the first few minutes of NYO.
- Pay attention to price movement and open interest surging towards resistance levels, indicating a potential reversal.
- Reversals tend to occur swiftly as traders who entered long positions late are forced to exit.
The setup becomes invalid if the initial spike is completely retraced. In such cases, targets for the reversal are local support levels like demand zones or the daily Volume Weighted Average Price (VWAP), with the final take profit set at the daily low.
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