Timing Solutions for Swing Traders: A Novel Approach to Successful Trading Using Technical Analysis and Financial Astrology

OPEN

The open refers to the price of the first trade at which a stock is traded for that day. It plays a key role in the analysis according to the candlestick system. If there is buying demand, the market will open up higher than its previous day’s closing, and if there is a lack of demand, the market will open lower than its previous day’s closing. If the price opens higher outside the previous day’s range, the buying demand is very strong, and if it opens lower outside the previous day’s range, there is great selling pressure. Traders have to be cautious on such days and expect greater volatility in the price’s movements when it opens outside the previous day’s range.

If the close of the day is higher than the opening price, then the buying power is stronger than the selling power of that day. To the contrary, if the close of the day is lower than the opening price, then the selling pressure is stronger than the buying power of that day. See Figures 3.1 and 3.2. A study of the relationship between the open and the close of the day will reveal the strength of the buying power or the pressure of the selling power for that day.

FIGURE 3.1 Black candlesticks are formed when opening prices are higher than closing prices. The illustration shows optimistic buyers buying at the top, but failing to push prices upward, and finally overcome by selling pressure toward the end of trading. The pessimists won the day.

FIGURE 3.2 White candlesticks are formed when closing prices are higher ...