The opening price of a daily or a weekly bar
usually illustrates the amateurs' view of value.
Research has shown that opening prices very often
occur near the highs or lows of daily bars.
Prices tend to recoil later in the day from the
extremes set early on by the buying or selling of
amateurs.
The actions of professional traders are often
reflected in the closing prices of daily and
weekly bars. They become especially active near
the close, taking profits to avoid holding positions
overnight.
In bull markets prices often hit lows on Monday and
Tuesday due to profit taking by amateurs and then
rally to new highs on Thursday and Friday. In bear
markets prices often make new highs for the week on
Monday and Tuesday and new lows then occur on Thursday
or Friday.
About the Author
Philip Birchley is a successful trader in Suffolk, UK. To see the trades he's making as he makes them and for more trading wisdom, email trading-wisdom@aweber.com