Parts of a Trading Day

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Technical Traders

• 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
  
  
• Head
  • High in an up day
  • Low in a down day
  
  
• Shoulders
  • Close in an up day (top of candlestick body)
  • Open in a down day
  
  
• Hips
  • Open in an up day (bottom of candlestick body)
  • Close in a down day
  
  
• Feet
  • Low in an up day
  • High in a down day

The Waist

• 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"

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last modified on February 9, 2020

URL: http://mysite.verizon.net/bonniehill/pages.aux/murrey/waist.html