Market Profile analyzes price and time to understand market behaviour.
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Here are four critical open types used in intraday trading:
1) Open Drive
Definition: A strong, one-sided move immediately after the market open.
Implications: Indicates a strong imbalance of buyers or sellers. It sets the tone for the day, suggesting potential continuation of the trend.
2) Open Test Drive
Definition: A price move away from the open, testing a specific price level (often a previous day's high or low),followed by a reversal.
Implications: The subsequent move can indicate the direction of the day.
3) Open Rejection Reverse
Definition: A strong initial move in one direction, followed by a sharp reversal back to the open or near it.
Implications: Indicates a strong rejection of the initial price level. It often signals a potential change in market sentiment.
4) Open Auction
Definition: A period of consolidation or sideways trading immediately after the open, without a clear directional bias.
Implications: Indicates a balance between buyers and sellers. The subsequent breakout from this range can provide trading opportunities.
These open types provide valuable insights into market sentiment and potential price movements, helping traders make informed decisions.
Note: While volume is crucial for a deeper understanding of market profile, it's not essential for recognizing these open types.
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