The XBP Market Key Times indicator plots vertical lines in the following key market times (all times in Chicago time zone, add +1 hour to get New York times):
- Market’s Open: 08:30
- First Market Hour: 09:30
- Midday: 11:00
- 15 minutes before the close: 15:00
- Market’s Close: 15:15
The first two vertical lines, Market Open and First Market Hour, contain what is called the Opening Range. During the first hour there are lots of activity in the markets and some traders look specially at this opening range maximum and minimum as possible levels of support and resistance for the rest of the day.
The midday line marks the lunch break and the start of the period with less activity during the day. Also, some traders believe that the majority of the days there are up to 2 trends per day, if there is no change in the trade direction by midday, the morning trend will stay for the rest of the day, but if instead, the trend changes direction right before the midday break, then the new trend will remain until the close. You can see an example of this believe in the middle day (7th of January 2016) in the screenshot above, but as well you can see how the next day (8th of January 2016) this same theory doesn’t hold after the price bounces off from the VWAP resistance level.
The close of the market is always a high activity market period and by nature unpredictable. Plenty of orders are market to be closed by the end of the day at market price. Savvy day traders stay away from this period all together. That’s why the bright red line is configured, by default, 15 minutes before the actual close. Once you see this line, you shall get out of your positions at any price to avoid going overnight and suffer a potential big loss with the big intraday swings.