Analyzing New York Reversal Trading Patterns

Sep 20, 2024

Daily Profile Series: New York Reversal (Part 2)

Introduction

  • Focus of the session: New York Reversal
  • Reference to Part 1: London Reversal

Session Overview

  • Key trading sessions:
    • Asia
    • London
    • New York AM
    • New York PM
  • Focus on London and New York AM sessions for indices

Understanding New York Reversal

  • Definition: A candle formation displaying:
    • Open High Low Close (OHLC)
    • Open Low High Close (OLHC)
  • Difference from London Reversal:
    • London does not reach a relevant PD (Price Delivery) array.
    • Moves higher into New York to form the reversal.

Bullish New York Reversal

  • London moves lower, does not reach higher timeframe level.
  • Retraces into New York, reaches higher timeframe key level.
  • Change in state of delivery occurs, leading to a move higher.

Bearish New York Reversal

  • London retraces, New York hits higher timeframe key level.
  • Change in state of delivery occurs, leading to a move lower.

Examples from TradingView

Example 1

  • Marked Level: Previous day low as sell-side liquidity.
  • London reaches lower but does not hit a higher timeframe level.
  • New York reaches the higher timeframe level.
  • Look for change in state of delivery with a series of down-closed candles.

Example 2

  • London forms a low, suggested as a London reversal.
  • No relevant higher timeframe level reached, indicates a fake change in state of delivery.
  • Focus on previous failures, anticipate New York reversal.

Example 3

  • Observing lower half of wick and consequent encroachment.
  • No significant high forms in London for a potential bearish reversal.
  • New York session shows a displacement down after reaching a high.

Framing Trades

  • Identify external liquidity and range levels.
  • Watch for changes in state of delivery after liquidating previous highs/lows.
  • Look for overlapping confluences (e.g., session times, order blocks).

Final Thoughts

  • New York Reversal can also function from London Reversal scenarios.
  • Importance of higher timeframe objectives in framing trades.
  • Encourage watching both London and New York sessions for optimal trading strategies.