Overnight Bias: Net Long/Short with Percent

5월 6일

Overnight bias can assist with NY session gap fades or gap and go trading once the NY session is open.
Some general gap rules are:

1. Gap Direction Aligned with Overnight Bias
Rule: If the NY session gaps up and the overnight bias is Net Long (e.g., >60% of bars above the overnight open), favor longs.

Confirmation: Look for price to hold above overnight open or VWAP.

Invalidation: If price re-enters the overnight range, reassess.

2. Gap Opposing Overnight Bias (Contrarian Setup)
Rule: If the NY opens opposite the overnight bias, expect potential gap fill or reversal.

Trade Bias: Look for retracement back toward the overnight open or VWAP.

Example: Overnight was Net Long, but NY gaps down → wait for reclaim of VWAP to go long, else fade strength.

3. Gap Into Prior Day Value Area (VAH to VAL)
Rule: If the NY session gaps into the prior day value area:

It implies mean reversion behavior.

Expect price to rotate toward the POC (point of control).

Trade Bias: Fade toward POC if overnight bias is balanced or opposite the gap direction.

4. Gap Outside Prior Day Value Area
Rule: A gap above VAH or below VAL suggests potential breakout or new trend day.

Trade Bias: If overnight bias aligns (e.g., gap above VAH + Net Long overnight), consider trend continuation.

Invalidation: If price breaks back inside the prior day value area, watch for failed breakout → fade trade possible.

5. Gap Above Prior Day High / Below Prior Day Low
Rule: This is a true breakout gap.

Above Prior High + Net Long Bias: Look for continuation.

Below Prior Low + Net Short Bias: Look for sell pressure continuation.

Trade Bias: Use pullbacks to the prior high/low or overnight open for continuation setups.

6. Gap Within Prior Day Range
Rule: If the NY open is within the prior day’s high and low, expect chop or balanced conditions.

Trade Bias: Use overnight VWAP and prior POC as decision zones. Be cautious unless a breakout occurs.

7. Failed Gap and Re-entry into Prior Day Range
Rule: If price gaps above prior high but re-enters the prior range, it's a failed breakout.

Trade Bias: Look for a fade back to VAH or POC.

Confirmation: Watch for breakdown below overnight VWAP or failure to hold overnight open.

8. Gap + Overnight VWAP Divergence
Rule: If price gaps opposite the direction of VWAP (e.g., VWAP rising, gap down), wait for confirmation.

Trade Bias: Be cautious with early trades. Bias may flip if VWAP is reclaimed.

9. Gap + Overnight Open Test
Rule: If price opens with a gap and then retests the overnight open, that level becomes a decision zone.

Trade Bias:

Hold above = trend continuation.

Rejection = gap fill or reversal.

10. Unfilled Gap = Trend Bias
Rule: If the gap remains unfilled for the first 30–60 minutes, it increases the odds of a trend day.

Trade Bias: Trade pullbacks in the direction of the gap and overnight bias.

Should anyone have suggestion to add please do so.

5월 22일

릴리즈 노트

I have added price magnitude to the Overnight Bias which adds a second dimension to the overnight bias. Anyone can modify the script and good luck traders.