I'm wondering what peoples opinions are about the overnight price points for the ES ? Respected traders like Ft71 mention the overnight high and low and the vpoc but I am wondering why he is only "sometimes" using the low volume nodes from the overnight. It seems that if the overnight high and low are important then the low volume nodes should play a bigger role too and various swing points.
Many have seen Steidlmeyers volume strips webinars and he has moved to a 24 hour market so this would seem to support the idea that the overnight data might need to be looked at closer then Ft71 and others have mentioned.
I am torn between the overnight and just the day session data and sometimes get confused by having too many levels to watch. I'd appreciate any opinions on this. Thank you.
I know what you mean about too many levels to watch and have been working on this issue as well. Personally I prefer to watch how price reacts (acceptance or rejection) at key volume levels (HVNs or LVNs) as opposed to worrying about whether the level is overnight or in the day.
Bear in mind FT71 is a scalper so the granularity of the level appears to be more critical. Jim Dalton also places heavy emphasis on analyzing the overnight session as well with many references to the overnight high and low. It appears the accuracy of the level is more important for scalpers as there is less room for error.
so you are saying that you prefer to just group all the sessions together and since the overnight session has little volume that it just doesn't matter. Is this correct ? I could equate this to how Ft71 derives his high and low volume zones from composites. I am more of a scalper so I guess I like to see what is happening at all these key areas.
@Volt, yes the overnight session has little volume so little impact. I'd take this with a grain of salt though as my style is quite the opposite of scalping. There is a very good free video here about overnight markets for short term traders:
As Steidlmayer has himself said, that overnight matters. But make sure you are using the correct Profile tools since there are a lot of them out there that do not calculate as it is taught at the CME. Also, as mentioned previously, the response to an area is more important than which levels should be considered to begin with. Watch for a pioneer wave, as Peter describes it, and if it happens to originate from a known level, theres your clue of what market participants are likely to do.
Overnight matters to me because I am only looking for particular setups to go in and out of. I am not going to hold a position more than a few hours. I have seen some pretty tremendous moves in the overnight. I think you could easily get stopped out if you are holding a longer overnight position.
What I would like to know, and don't, is what the hour by hour average volume in the ES is? I expect overnight to be lower volume, but thatcould still be plenty enough to get my fills. I also would like to see if specific kinds of market patterns are more prevelant when London or Asia are open. Perhaps more trending and less occilating. But I don't really know any of this. I wish that I did. Any one know how I can find out.
Overnight action is really, really important, but you have to use it differently than data generated in the day session. The night session is more about context than simply generating levels, and I tend to find that the volume generated levels aren't as important, with the exception of VWAP.
Levels: In my experience the high and low of the night session are the most important levels it generates. Oftentimes the market will make a concerted effort to test one or both, and whether it accepts or rejects that level is really important to know. Generally, an hour before the day session starts, I am watching the price action and noting whether it is trading near the extremes of the night session. The midpoint or VWAP of the night session are also useful as targets if you trade responsive action and are looking for mean reversion. Today's action demonstrated this nicely. I've attached today's charts from CL and ES.
Context: Context is extremely important, and I tend to find that the overnight can really help provide it. When you observe the overnight action, as yourself: What did the market do? Did it trend, or range? What range did it put in? How does this compare to the ranges of the night sessions the last 5 sessions, 10, 20? Was there news overnight? If so, what was it?
Eventually, patterns will start to pop out at you. Maybe you observe that trending conditions overnight lead more often to ranging conditions during the day (I'm not claiming this, btw). If you find something like that, you now have an edge, and a fairly sharp one at that.
Last edited by ValueFocused; January 6th, 2014 at 03:37 PM.
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