Parts of a Trading Day
- Use Open, High, Low, and Close
- May add Volume and Open Interest
Munehisa Homma (Sokyu Homma)
- He designed the Japanese Candlesticks, and defined four parts to a trading day
- High in an up day
- Low in a down day
- Close in an up day (top of candlestick body)
- Open in a down day
- Open in an up day (bottom of candlestick body)
- Close in a down day
- Low in an up day
- High in a down day
- The waist is an additional part of the trading day added by T. H. Murrey
- It is calculated from the previous day's price action
- It is related to price momentum
- Support for an up day in progress
- Resistance for a down day in progress
- Basic formula for the waist (the 50% waist)
- (Open + Close) / 2
- (Shoulders + Hips) / 2
- Will be valid for a "normal" trading day (a "normal-sized" candlestick body)
- We should expect a fast reversal or a "gap" off any market that opens and closes on the "waist"
- Effects of Volume and the waist
- Volume will decrease or increase at the "waist"
- Low volume followed by a reversal or continued fall will indicate that our "waist" has been ignored, and should be adjusted
- Adjusting the "waist"
- If the previous day's candlestick body was extremely long, multiple "waists" will be generated
- If the "50% waist" is not holding, the "shoulders" of the previous trading day will be used as the "waist"
- A gap up or down shall void our waist for that particular day
- If the price action stalls out on a MML Line, then the MML Line is used as the
"major waist" and the 50% waist is considered to be a "minor waist"
created by Bonnie Lee Hill,
last modified on February 9, 2020