Lecture 4: New Day/Week Opening Gaps & Opening Range Quadrants

Title: New Day/Week Opening Gaps & Opening Range Quadrants
Date: August 8, 2024
Mentor: Michael J. Huddleston (The Inner Circle Trader)

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1. Executive Summary & Core Objective

Delivered on ICT's 52nd birthday, Lecture #4 presents a masterclass on New Day Opening Gaps (NDOG), New Week Opening Gaps (NWOG), and how to grade opening range gaps using Fibonacci quadrant levels to forecast daily price delivery [374, 375, 376].

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2. Core Concepts & Technical Mechanics

A. Opening Range Gap Mechanics

• Definition: The price gap formed between the 4:14 PM ET settlement/close of the previous regular trading hours session and the 9:30 AM ET open of the current session [375].
• Classification:
  • Premium Opening Range Gap: Opens higher than the previous 4:14 PM ET close.
  • Discount Opening Range Gap: Opens lower than the previous 4:14 PM ET close.

B. Grading Opening Range Gaps (Quadrant Levels)

• Apply the Fibonacci tool to the Opening Range Gap with settings: 0.0, 0.25, 0.50 (Consequent Encroachment - CE), 0.75, 1.0 [375].
• The 70% Rule: Approximately 70% of the time, price will retrace to at least the Consequent Encroachment (0.50 CE) of the Opening Range Gap prior to 10:00 AM ET [375].

C. Confluence of NDOGs and NWOGs

• Nested Gaps: When an old New Week Opening Gap and a New Day Opening Gap nest in close proximity, they form a powerful gravitational magnet for price [376, 382].
• Price will frequently use the CE of a historical NDOG or NWOG as exact support/resistance during intraday expansions [376, 380].

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3. Trading Discipline, Mindset & Psychology

A. Anticipatory Price Reading

• Forward testing requires training the mind to anticipate movement into mapped gap quadrants before the move occurs [376, 378].
• Do not react in panic when price expands rapidly toward mapped gap levels; anticipate the reaction at the 0.25, 0.50, or 0.75 quadrant points [376, 380].

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4. Step-by-Step Action Plan & Homework

1. Plot all historical NDOGs and NWOGs on your daily and 15-minute charts [376].
2. At 9:30 AM ET daily, draw the Opening Range Gap between previous 4:14 PM close and 9:30 AM open [375].
3. Apply Fibonacci quadrant levels (0.25, 0.50 CE, 0.75) [375].
4. Track how often price hits the 0.50 CE level before 10:00 AM ET [375].

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Reference Source Link:
Watch ICT 2024 Mentorship - Lecture #4 (August 8, 2024) on YouTubeWatch on YouTube