How To Use Midnight Open - ICT Concepts

Summary

In this video, the speaker explains the importance of using the midnight opening price (MOP) for market analysis, particularly when trading assets like NASDAQ, oil, and gold. The strategy involves identifying key levels above or below the midnight price to determine market direction, with examples showcasing bearish and bullish setups. Key concepts like fair value gaps, order blocks, and liquidity levels are emphasized as essential tools. The speaker walks through multiple examples to illustrate how understanding and marking the midnight opening price can enhance trading accuracy and improve decision-making.

Takeaways

• 😀 The midnight opening price should be the first thing you mark when analyzing charts each day.
• 😀 This price point serves as a key reference for determining the market's direction—whether bearish or bullish.
• 😀 For a bearish setup, look for price movement above the midnight opening price toward higher time frame levels.
• 😀 For a bullish setup, seek price movement below the midnight opening price toward key support levels.
• 😀 The video provides three examples using NASDAQ, oil, and gold to illustrate the application of midnight opening price in different assets.
• 😀 On NASDAQ, you should focus on price accumulation and manipulation after the midnight open to gauge the market's bias.
• 😀 Once price moves above or below the midnight opening price, the next step is to identify higher time frame levels and liquidity zones.
• 😀 The oil example emphasizes internal and external liquidity levels, and how a shift in price can signal potential entry points.
• 😀 For gold, focus on the price action during the London session and use failure swings and fair value gaps to confirm trade setups.
• 😀 Fair value gaps, order blocks, and liquidity sweeps play a crucial role in setting up trades and targeting key price levels.
• 😀 By focusing on the midnight opening price, traders can frame their analysis, spot market manipulations, and execute more accurate trades.

Q & A

What is midnight opening price, and why is it important for trading?

Midnight opening price is the price level at midnight (UTC) that marks the start of the new trading day. It is important because it serves as a reference point for market movements, helping traders identify potential reversals or continuation patterns when price action deviates from it.

How should traders use midnight opening price when analyzing market conditions?

Traders should use the midnight opening price as the first level to mark when opening charts. If the market is bearish, they look for price to move above the midnight opening price into a key higher time frame level. If the market is bullish, price should move lower than the midnight opening price into a key higher time frame level.

What role does the concept of 'key higher time frame level' play in this analysis?

Key higher time frame levels are important for providing context to price movements. These levels act as support or resistance and help traders identify potential reversal points or areas where price might find liquidity. This concept is crucial when deciding whether the market is likely to continue or reverse.

Can you explain the significance of the 'fair value gap' in the context of the video?

A fair value gap occurs when there is a gap in price action where no trades have occurred, typically following a strong market move. In the script, fair value gaps are used to identify areas where the market might come back to fill the gap, providing opportunities for entry or confirmation of trends.

How does the concept of liquidity play into the trading setups described in the video?

Liquidity is the key to understanding market moves. The video mentions buy-side and sell-side liquidity, which refers to areas where there is significant interest in buying or selling. Price often seeks out these liquidity zones before continuing its trend, which is why traders watch these areas closely when planning trades.

What is the 'power of three' concept, and how does it relate to the market structure?

The 'power of three' concept involves observing three key candles—typically the open, high, and close—which help identify market structure. In the video, this concept is used to define a bearish structure after the midnight opening price, where price first moves higher (manipulation) and then continues lower, confirming a bearish market setup.

Why is the New York session specifically emphasized in the analysis?

The New York session is emphasized because it tends to provide significant price movement and liquidity. Traders often focus on the New York open (9:30 AM) to gauge the direction of the market after the initial moves during the Asian and European sessions.

What is the difference between the 9:30 AM New York session open and the 8:30 AM session mentioned in the video?

The 9:30 AM New York session open is typically seen as the more significant market-moving event compared to the 8:30 AM session, which refers to the opening of the U.S. stock market. The 9:30 AM open marks the beginning of active market conditions, making it more relevant for many traders.

What are 'order blocks,' and how do they fit into the strategy described in the video?

Order blocks are areas where significant buying or selling activity has previously occurred, often leading to price reversals or consolidations. In the strategy, order blocks are used as potential entry points, where traders look for confirmation of price action, such as displacement or liquidity sweeps, to trigger their trades.

How does the trader decide whether to enter a trade immediately after the fair value gap or wait for further confirmation?

The decision to enter a trade immediately or wait depends on the trader's confidence. If the price action fills the fair value gap but shows clear signs of continuing in the expected direction, a trader might enter the trade immediately. If the market shows uncertainty or if additional confirmation is needed, traders might wait for further price movement before entering.