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ICT YT - 2025-01-10 - 2025 Lecture Series - SMC Opening Range Gaps

Last modified by Drunk Monkey on 2025-04-03 12:09
1 00:00:28 --> 00:00:31 ICT: Hey folks, welcome back. All right, so we're going to be doing a very
2 00:00:31 --> 00:00:39 specific study on the smart money concept, opening range gap. All right,
3 00:00:39 --> 00:00:43 so obviously I started this lecture series off with some general commentary
4 00:00:43 --> 00:00:49 around it, as I stated I would be doing very specific details and rules and
5 00:00:49 --> 00:00:56 things of that nature around the model that I'll be employing in 2025 so an
6 00:00:56 --> 00:01:02 opening range gap. Obviously I see a lot of students with confusion. They they're
7 00:01:02 --> 00:01:08 thinking that the new day opening gap is the opening range gap, and hopefully
8 00:01:08 --> 00:01:15 we'll clear that up for them today. First and foremost, you have to check to
9 00:01:15 --> 00:01:21 make sure that your chart is showing in the regular trading hours, not
10 00:01:22 --> 00:01:27 electronic trading hours. You find that in the lower right hand corner, usually
11 00:01:27 --> 00:01:37 you'll see rth or eth right here, and it has to be toggled to record trading
12 00:01:37 --> 00:01:44 hours, and the time zone has to be set to New York, always, all right. So we're
13 00:01:44 --> 00:01:50 gonna be looking at this candlestick right here on a one minute chart. That's
14 00:01:50 --> 00:01:56 the time frame that's being shown here. So this candlestick, if you take a look
15 00:01:56 --> 00:02:06 at this candlesticks, closing price, you can see it up here, 21,049.75, and I'm
16 00:02:06 --> 00:02:11 highlighting it here so we can see that the candlestick is basically small,
17 00:02:11 --> 00:02:16 little body less candle, and I didn't want to hide that by having that little
18 00:02:18 --> 00:02:23 annotation covering it up. So that's your first point of interest, which is
19 00:02:23 --> 00:02:27 previous days, regular trading hours, settlement price. That's always going to
20 00:02:27 --> 00:02:33 be, as you can see here, at the 4:14pm Eastern Time, on a one minute
21 00:02:33 --> 00:02:44 candlestick. Here we can see, at 9:30am on the very next day. Little trading
22 00:02:44 --> 00:02:48 hours is going to only show the difference between where we settled the
23 00:02:48 --> 00:02:57 previous day at 4:14pm to now, the first opening price at 930 Eastern time. Again
24 00:02:57 --> 00:03:03 all New York local time. So this here shows that we're opening higher than
25 00:03:03 --> 00:03:10 where we settled in regular trading hours the previous trading day, 9:30am
26 00:03:10 --> 00:03:16 Eastern Time, higher opening price in regular trading hours is classified as a
27 00:03:16 --> 00:03:24 premium opening range gap. The opening range gap is 120 handles or larger.
28 00:03:24 --> 00:03:34 Price could leave the gap unfilled, and you have a premium opening range gap.
29 00:03:34 --> 00:03:37 What you're doing is you're going to take your Fibonacci, and this is the FIB
30 00:03:37 --> 00:03:41 settings. That way you guys can have it real quick reference point. You're going
31 00:03:41 --> 00:03:46 to take the FIB and anchor to the previous settlement price at regular
32 00:03:46 --> 00:03:49 trading hours, at 414 on a one minute chart, you're going to drag the
33 00:03:49 --> 00:03:56 Fibonacci up to the opening price the next trading day at 930 Eastern Time and
34 00:03:56 --> 00:04:00 again, your chart should be toggled to regular trading hours. It should look
35 00:04:00 --> 00:04:03 like this in the lower right hand corner when you're on that one minute chart.
36 00:04:04 --> 00:04:07 These are the settings that have to be toggled. And if your numbers don't look
37 00:04:07 --> 00:04:11 like this, all you have to do is just double tap inside of every individual
38 00:04:11 --> 00:04:21 gray box and type in what you see mine is showing here, obviously, when you
39 00:04:21 --> 00:04:26 have a large gap like this, which is a couple 100 handles between the previous
40 00:04:26 --> 00:04:32 day's regular trading hours, settlement at 4:14pm to the opening price at 930
41 00:04:32 --> 00:04:38 Eastern Time The following day, with such a large gap like that, the rules I
42 00:04:38 --> 00:04:42 employ is that it's probably going To keep going in the direction of an
43 00:04:42 --> 00:04:47 extreme gap like that. And if it ever, it may not even do this much, but if it
44 00:04:47 --> 00:04:52 ever does trade below that low, usually it's going to stop around the upper
45 00:04:52 --> 00:04:59 quadrant, and you can see that here. Okay, so 25% of the opening range gap is
46 00:04:59 --> 00:05:03 usually what you'll see. Traded there. And I actually gave you this earlier in
47 00:05:03 --> 00:05:08 the week with the lecture, the very first lecture outlined it, and then I
48 00:05:08 --> 00:05:13 traded with that same logic that evening, going into the midnight opening
49 00:05:13 --> 00:05:21 range, which allowed me to segue into that smart money concept when there's a
50 00:05:21 --> 00:05:28 large gap like this, okay, 120 handles is a good ballpark number where it could
51 00:05:28 --> 00:05:32 potentially keep the gap unfilled, meaning that it doesn't come all the way
52 00:05:32 --> 00:05:39 back down to the previous day's selling price, but it will eventually, at a
53 00:05:39 --> 00:05:44 later time, do that very thing. Now, if you are seeing the market trade higher
54 00:05:44 --> 00:05:49 as we go into an economic report on the calendar, this could usually be kind of
55 00:05:49 --> 00:05:54 like pumping the market up higher, and then at a later time in the same week or
56 00:05:54 --> 00:05:59 the very next day, it can trade down into that level here and maybe go into
57 00:05:59 --> 00:06:02 the middle of the middle of the gap, which is consequent encroachment. This
58 00:06:02 --> 00:06:11 is that 50% level here. Eventually price will want to rebalance all of this here,
59 00:06:12 --> 00:06:16 because it's inefficient, because there's no price at all zero. So this is
60 00:06:16 --> 00:06:20 an actual liquidity void. It's not a bias on a balanced loss, on an
61 00:06:20 --> 00:06:24 efficiency. It's an actual liquidity void. It's an actual void because
62 00:06:24 --> 00:06:29 there's no trading buying or selling between the price of this closing price
63 00:06:29 --> 00:06:35 and where we opened at 930 using regular trading hours. Now obviously, when we
64 00:06:35 --> 00:06:42 start trading at 6pm unless this is a Friday, which it's not because you can
65 00:06:42 --> 00:06:49 see it says Monday, at Monday, Eastern Time, at 6pm the market will open up,
66 00:06:49 --> 00:06:54 and then whatever it does between then and 930 that's shown in electronic
67 00:06:54 --> 00:06:59 hours. We don't need to see that here, because the opening range gap is defined
68 00:06:59 --> 00:07:05 by regular trading hours only. Soon as you start showing electronic trading
69 00:07:05 --> 00:07:11 hours, what you're looking at there is new day opening gaps and or new week
70 00:07:11 --> 00:07:15 opening gaps. So just make sure you know in your notes, if you're looking at your
71 00:07:15 --> 00:07:20 time reference in the lower right hand corner, regular trading hours is always
72 00:07:20 --> 00:07:25 going to denote what the opening range gap is going to be. If there is a gap,
73 00:07:27 --> 00:07:33 if it's showing electronic trading hours eth, then it's going to give you the
74 00:07:33 --> 00:07:39 information that we derive for New Day opening gaps and or new week opening
75 00:07:39 --> 00:07:47 gaps. Okay, let me see when the market shows a lower gap opening using the same
76 00:07:47 --> 00:07:56 parameters at 4:14pm, and we open down 930 Eastern Time The following day,
77 00:07:56 --> 00:08:06 again using the record trading hours. This lower gap opening when we have that
78 00:08:06 --> 00:08:13 at 930 Eastern if that lower opening price in regular trading hours is
79 00:08:13 --> 00:08:19 appearing, then that is classified as a discount opening range gap. If it's this
80 00:08:19 --> 00:08:27 large, again, we have several 100 handles the 25% of the opening range
81 00:08:27 --> 00:08:35 gap, or lower quadrant here, that would be your your target, if at all. It may
82 00:08:35 --> 00:08:41 not even trade back to the high or even go back into the open range gap. So we
83 00:08:41 --> 00:08:48 would use the rules as I outlined when it was a premium open gap. So let's take
84 00:08:48 --> 00:08:54 us back to that premium opening gap. And I want you to think about how when we're
85 00:08:54 --> 00:08:59 looking at the lower gap opening, we would be drawing the Fibonacci down,
86 00:08:59 --> 00:09:04 whereas a premium opening gap. We're drawing it up so it gives you the proper
87 00:09:04 --> 00:09:10 classification for the quadrants. Upper quadrant here would be the a quarter of
88 00:09:10 --> 00:09:19 the opening range gap, if we are trading anywhere between 20 and 75 handles with
89 00:09:19 --> 00:09:23 an opening range gap, whether it be premium or a discount gap. And again,
90 00:09:23 --> 00:09:28 the classification is only determined by if it gaps higher at 930 that's a
91 00:09:28 --> 00:09:35 premium. That's a gap higher. If it gaps lower at 930 than where we settled at
92 00:09:35 --> 00:09:40 414 that's a discount opening range gap, okay, and the only reason that's
93 00:09:40 --> 00:09:44 important is it helps you determine what direction you're going to draw the fib
94 00:09:44 --> 00:09:48 on. So premium opening range gaps are drawn from the previous days, 4:14pm,
95 00:09:49 --> 00:09:54 Eastern times, settlement price up to 930 opening next day again, toggled
96 00:09:54 --> 00:09:58 along. We're into trading hours. And reverse it for discount opening range
97 00:09:58 --> 00:10:06 gaps. So. But if it's 20 to 75 handles, usually, if it's a premium opening range
98 00:10:06 --> 00:10:11 gap like this, what I like to look at with electronic trading hours. Okay, so
99 00:10:11 --> 00:10:14 this is for your notes. You gotta write this stuff down like I do everything for
100 00:10:14 --> 00:10:19 you. If it opens higher, I like to see it trade
101 00:10:21 --> 00:10:26 to a pre market session. That means anywhere between six o'clock in the
102 00:10:26 --> 00:10:33 morning, Eastern Time to 930 all that time there is pre market. So if we have
103 00:10:33 --> 00:10:40 a premium open range gap like this at 930 I want to see it trade to some
104 00:10:40 --> 00:10:46 overnight London high, or relative equal highs, or some high that was formed
105 00:10:46 --> 00:10:50 between six o'clock in the morning, Eastern Time to 930s opening price. So
106 00:10:50 --> 00:10:54 it's going to run by side initially, and then I would look forward to trade back
107 00:10:54 --> 00:10:59 down into minimum consequent crochet, which is the red level here, or middle
108 00:10:59 --> 00:11:04 of the gap, and depending upon how I'm foolish or bearish or if I'm just
109 00:11:04 --> 00:11:06 trading inside of a range, will determine whether or not I'm going to
110 00:11:06 --> 00:11:10 look for a complete gap closure. And there's a lot more rules we'll talk
111 00:11:10 --> 00:11:14 about before we get to the end of this month, and I'll have all those details
112 00:11:14 --> 00:11:17 for you, but we're just giving you very specific rules that I'm going to be
113 00:11:17 --> 00:11:20 employing for the majority of the times when I'm using opening range gaps in
114 00:11:20 --> 00:11:29 2025 with this model I'm giving model, I'm giving you in detail. Everything I
115 00:11:29 --> 00:11:34 was saying for when it's a premium gap, you're just going to reverse the logic
116 00:11:34 --> 00:11:38 for a discount opening range gap. But here you can see it's the very next day
117 00:11:38 --> 00:11:48 here where that gap higher, that premium open range gap, it trades up, and it
118 00:11:48 --> 00:11:53 eventually comes back down into your day, that that three o'clock in the
119 00:11:53 --> 00:11:56 afternoon trades down in that upper quadrant. So you can see how it was not
120 00:11:56 --> 00:11:59 willing to come all the way back down and close in that gap, which will be a
121 00:11:59 --> 00:12:06 perfect re delivery to that price. It's it's not happening here, but it does
122 00:12:06 --> 00:12:11 trade to the upper quadrant of that gap. Now, why is it called the upper
123 00:12:11 --> 00:12:16 quadrant? Because the gap starts here at the previous day at 414, Eastern Time,
124 00:12:17 --> 00:12:24 and opens here. So since it's an up gap, or premium gap. Think about this as the
125 00:12:24 --> 00:12:27 range. Well, this is the upper portion of that gap, this is the middle of that
126 00:12:27 --> 00:12:31 gap, this is the lower quadrant of that gap, and this is the low of that gap. So
127 00:12:31 --> 00:12:37 when it's an extremely large gap opening, my interest is only at this
128 00:12:37 --> 00:12:43 upper quadrant, and then I'll see if it wants to have any interest in going back
129 00:12:43 --> 00:12:50 down into the middle of that but 20 to 75 handles, I like the odds of it
130 00:12:50 --> 00:12:56 trading to mid gap. Now there's a sweet spot between 75 and 120 handles, where
131 00:12:56 --> 00:13:03 it can go either direction. So I usually err on the side of what do I see in
132 00:13:03 --> 00:13:06 other analysis, concepts that are going to help me, because I may have to just
133 00:13:06 --> 00:13:09 sit on my hands and wait till 10 o'clock and not trade anything at the opening
134 00:13:09 --> 00:13:13 range, which is the first 30 minutes of trading between 930 Eastern Time to 10
135 00:13:13 --> 00:13:19 o'clock. So when I have 75 handles to 120 handles, or less than 100 handles or
136 00:13:19 --> 00:13:26 so, these are just general rules where I have to lean on what the market has in
137 00:13:26 --> 00:13:30 price, where we are with the economic calendar, and where are we at with
138 00:13:30 --> 00:13:36 seasonal tendencies, the current market structure. All these things have to be
139 00:13:36 --> 00:13:43 referred to when the range is higher than 75 handles. All right, and then
140 00:13:43 --> 00:13:53 obviously, the very next day, entirely new trading day, we have a another gap
141 00:13:53 --> 00:14:00 here. Now this is the opening range gap, which is very, very small here, but it
142 00:14:00 --> 00:14:04 opens trades down. It comes right back up into it here, and then we break
143 00:14:04 --> 00:14:10 lower. All these lines here are derived from the previous 24 hour session where
144 00:14:10 --> 00:14:15 that opening range gap formed. So that premium opening range gap, that's what
145 00:14:15 --> 00:14:19 these levels are here. So this is the high of that previous opening range gap.
146 00:14:19 --> 00:14:23 The upper quadrant that I said that it would trade down to. You can see it when
147 00:14:23 --> 00:14:27 it did here. And then we just consolidated, hit it once more. And then
148 00:14:27 --> 00:14:34 we're rallied up. And then the next day at 930 This is 4:14pm on this
149 00:14:34 --> 00:14:38 candlestick, right there. Now, if I toggle one more over, now you're looking
150 00:14:38 --> 00:14:43 at this price, which is 930 in the morning on Tuesday, January 7, 2025 we
151 00:14:43 --> 00:14:49 break lower trade back up into that opening range gap. Breaks lower trades
152 00:14:49 --> 00:14:54 to the upper quadrant of the previous day's opening range gap. Then it goes
153 00:14:54 --> 00:14:59 consequent encroachment lower quadrant, and then a complete closure of the
154 00:14:59 --> 00:15:04 previous day. 90s, premium opening range gap. And then you can see how the market
155 00:15:04 --> 00:15:08 use all of those levels here. And then move a little bit lower into the
156 00:15:08 --> 00:15:17 session. When you're looking at your regular trading hours chart, you want to
157 00:15:17 --> 00:15:26 highlight every gap you have a gap here on the third of January, 2025 you have
158 00:15:26 --> 00:15:30 the gap that we started this lecture here with, and then that smaller one
159 00:15:30 --> 00:15:35 here, that's shaded, and then there was obviously one over here, but you're not
160 00:15:35 --> 00:15:38 going to include that for this discussion. But when the market opened
161 00:15:38 --> 00:15:48 up here, this gap is a liquidity void where it's zero trading, no buying or
162 00:15:48 --> 00:15:53 selling during early trading hours. So this is an actual liquidity void. When
163 00:15:53 --> 00:15:57 you see moves like this, this is unfortunately been classified as a
164 00:15:57 --> 00:16:00 liquidity void. It's not actually because there's actually buying and
165 00:16:00 --> 00:16:05 selling going on inside of that. Candlesticks range over here for trading
166 00:16:05 --> 00:16:09 hours, there is no trading there during electronic trading hours, there probably
167 00:16:09 --> 00:16:13 is. But for the sake of doing the analysis with regular trading hour
168 00:16:13 --> 00:16:19 charting, when there's gaps like this, the market will want to do patchwork
169 00:16:19 --> 00:16:25 where it'll deliver back down into it and offer price between these two
170 00:16:25 --> 00:16:28 defined levels, where the previous settlement at 4:14pm, Eastern Time to
171 00:16:28 --> 00:16:35 930 to next trading day, same thing over here. This is a premium gap. This is a
172 00:16:35 --> 00:16:41 premium gap. Okay, so premium opening range gaps start with the FIB at the low
173 00:16:42 --> 00:16:48 up to the new 930 opening price, just like as we did here, because it's a
174 00:16:48 --> 00:16:53 premium opening range gap. You anchor it to the closing price at 414, Eastern
175 00:16:53 --> 00:16:57 Time, and you draw the FIB up, and it shows your quadrant levels where you're
176 00:16:57 --> 00:17:01 going to be utilizing that information. So here, as the market starts to sell
177 00:17:01 --> 00:17:04 off, look how the consequent encroachment offers another shorting
178 00:17:04 --> 00:17:12 opportunity. Mid gap, right here, breaks down, comes back to the lower quadrant
179 00:17:12 --> 00:17:18 of this gap rolls over, uses the low of the gap starts to break down and trades
180 00:17:18 --> 00:17:23 into the opening price here, which is the high of this opening range gap,
181 00:17:23 --> 00:17:29 which is a premium opening range gap on the third of January 2025 so the market
182 00:17:29 --> 00:17:33 trades down into here, hits the high of that opening range gap. There trades
183 00:17:33 --> 00:17:38 down to consequent encroachment. Look at the bodies. See how they're respecting
184 00:17:38 --> 00:17:41 that midpoint, then rallies up and then breaks down. Look at the bodies
185 00:17:41 --> 00:17:45 respecting the low of that opening range gap, and then look at the reaction
186 00:17:45 --> 00:17:51 there, rallies up, takes out the relative equal highs here, and then it's
187 00:17:51 --> 00:17:55 most likely going to want to gravitate towards these relative equal lows here.
188 00:17:55 --> 00:17:58 That's this little too clean, things like that. Price levels like that, don't
189 00:17:58 --> 00:18:04 usually stay intact, and the market will want to go and disrupt that the smooth
190 00:18:04 --> 00:18:09 edges will be made jagged. So there's some principles. There's some very
191 00:18:09 --> 00:18:13 specific rules that I'm going to be employing. As you can see, not very
192 00:18:13 --> 00:18:18 complex. It's complex if you've never worked with the render trading hours and
193 00:18:18 --> 00:18:23 moved and toggled between electronic training hours but it's not complicated
194 00:18:23 --> 00:18:29 in terms of the logic. So the rule based ideas that I've applied here, they're
195 00:18:29 --> 00:18:34 very specific, but there's a gray area, but it's above 75 handles, up to 100
196 00:18:34 --> 00:18:39 handles or more, but not 120 where I can go both directions. So I'm a little bit
197 00:18:39 --> 00:18:43 more flexible in that range, but anything higher than 120 handles, I'm
198 00:18:43 --> 00:18:49 going to be leery and anticipating that gap in need immediately being refilled
199 00:18:49 --> 00:18:55 or rebooked to at least half the gap it can but I want to have a little bit more
200 00:18:55 --> 00:19:00 information. Besides just using this information in and of itself, I'm Hi,
201 00:19:08 --> 00:19:11 folks, I want to thank you for your continued interest. If you'd like these
202 00:19:11 --> 00:19:15 kind of lectures and you want to continue your learning, the best way to
203 00:19:15 --> 00:19:19 show that you're appreciating it is a free Thumbs Up on the video. I promise
204 00:19:19 --> 00:19:22 you it doesn't cost you anything until I'll talk to you next time. Good luck
205 00:19:22 --> 00:19:25 and good trading. You.