Showing posts with label Liquidity Sweeps. Show all posts
Showing posts with label Liquidity Sweeps. Show all posts

Saturday, July 11, 2026

ICT New York Midnight Open (NYMO): How to Actually Use It | Darya Filipenka

Traders use the New York Midnight Open (NYMO) in different ways. This is my approach. It is grounded in ICT principles (see second video below), though my interpretation differs slightly (first video). The New York midnight open is not a standalone trading level; it is a contextual framework for understanding accumulation, manipulation, and distribution within the intraday cycle.
 
Black horizontal line represents the NY Midnight Open (NYMO).
Red shaded area: discount entry zone at FVG; Green shaded area: expected premium extension target zone.
Option 1: Breakout Continuation (FVG)
A strong body closure past NY midnight open sets up a trend play. Enter on the retest of the first 3m/5m Fair Value Gap (FVG or imbalance) formed after the break. Stop loss goes beyond midnight open or the nearest swing point; target 2R.

Option 2: Liquidity Sweep Continuation
Price wicks through NY midnight open but fails to close past it, indicating a sweep. Enter at the next candle open once an opposing order block (OB) forms to confirm continuation. Stop loss goes at the sweep swing point; target 2R.

Option 3: Weak Breakout Reversal
A weak closure or immediate rejection wick at midnight open signals a fakeout. Enter a reversal play at the next candle open once a counter-trend OB forms. Stop loss goes at the midnight open or recent swing level; target 2R.

Option 4: Higher-Timeframe Inversion
A strong breakout hits a higher-timeframe (HTF) key level, forcing a reversal. Enter at the next candle open when the initial breakout FVG fails and acts as an Inversion FVG (IFVG), aligned with an opposing OB. Stop loss goes at the HTF swing point.
A key misconception is treating it as a level to trade from. Price does not react to it because it is "magical"; it serves as a reference point. Its value is understood through the Power of Three: accumulation, manipulation, and distribution. The New York midnight open often marks the transition between these phases.
 
ICT NYMO Explained.
 
Think of a sprinter: accumulation is the setup, manipulation the adjustment, and distribution the race. The move does not begin at the New York midnight open—it begins only after price leaves and holds away from it.
Stage 1: Accumulation
Defined by range-bound price with no clear direction or strong volume, often forming around the daily open. Intraday, price frequently consolidates near the New York midnight open. Position relative to the level is meaningless here; directional bias is not yet established and the dealing range is still forming.
Stage 2: Manipulation
The false move before the real move. Price may trade above or below the level to induce liquidity, but this does not define premium or discount. It is typically a setup. Price should interact with higher-timeframe levels and show a reaction, confirmed by order flow shifts or displacement. Once price completes this and returns through the level, manipulation is likely ending.
Stage 3: Distribution
The real move begins only after a decisive break and close beyond the NYMO level. Sweeps or consolidation indicate continued manipulation. A strong close, typically with displacement, confirms expansion. Repeated returns to the level signal that the range is still forming.
Dealing Range Perspective
The Dealing Range is the price range between a defined high and low that establishes premium and discount. The New York midnight open acts as the center of the developing range. Only after distribution begins do true expansion, clear premium/discount zones, and defined swings emerge. These cannot be traded meaningfully until price holds away from equilibrium.
 
Invalidation
If price fails to hold after a break, distribution is not active. Rejections (sweeps without close) and weak closes followed by reversals signal lack of confirmation. Strong, sustained closes are required. Continuous trading above and below the NYMO level without expansion indicates ongoing accumulation—best to stay out.
 
Invalidation Signal: If price fails to hold away from the NYMO, distribution is
inactive and the market remains undecided. Not every touch is significant. 
 
Retest Logic (Time-Based Behavior)
If the level is not retested between 3:00–7:00 a.m. New York time (range formation window), the probability increases of a retest between 8:30–11:00 a.m. If it is retested early, the range is often balanced and distribution may continue. If not, the level becomes a likely pullback or mitigation target, creating higher-probability setups.
 
How to Trade It
Wait for a strong close beyond the NYMO level, then look for a retracement into the first fair value gap; enter on reaction with risk beyond the level. Alternatively, treat sweeps as continuation setups with confirmation via order flow and structure, refining entries with candle sequences, order blocks, or fair value gaps.

If a break lacks conviction, wait for confirmation such as a break in opposing structure. In optimal conditions, combine a strong break, order flow confirmation, and higher-timeframe alignment. If a higher-timeframe objective is reached immediately after the break, favor reversal setups.
 
Some Extremely Useful Statistics
The following statistics can be used to align with what occurs between 3:00 and 7:00 a.m. to confirm a potential retracement.
► SPX / ES: If price opens at 9:30 a.m. above the New York midnight open, there is a 58% chance it will retrace to that level. If price opens below the New York midnight open, the probability of a retracement increases to 69%. 
► On Thursdays, there is a stronger tendency to retrace to the New York midnight open when price opens below the level. On these days, the probability increases to 88%.
► NDX / NQ: If price opens above the New York midnight open, there is a 57% chance of a retracement. If price opens below the level, there is a 63% chance of a retracement back to the New York midnight open.
► On Tuesdays there is a 67% chance of a retracement to the New York midnight open if price opens above the level, and a 73% chance of a retracement if price opens below it. 
► Gold: If price opens above the New York midnight open, there is a 47% chance of a retracement to that level. This idea should again be aligned with higher-timeframe levels and the 3:00 to 7:00 a.m. range—specifically, what occurs during that window. If price opens below the New York midnight open, there is a 51% chance of a retracement.
 Reference:
  
 
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Wednesday, February 26, 2025

How Algorithms Impact Market Direction: 80% of Breakouts Fail | Richie Naso

The first thing you need to truly understand is that algorithms control the stock market; not the large institutional players, not the massive hedge funds, but price auction algorithms. Algorithms are there to create volatility and liquidity; they have no mind, they are programmed to go to technical areas, certain levels, to take out buy and sell orders. 
 
The market operates on a day-to-day basis with both premium and discount levels. When the market moves toward a premium level, the algorithms target that area to create liquidity. Conversely, when the market moves lower, the algorithms aim for the discount area to generate liquidity.
 
 Equilibrium Level and Premium -Discount Zones.

Algorithms dictate the direction of the market, especially in the near term. The mathematical equations used in these algorithms are designed by humans, based on historical data. 
 
When the market is trending lower and algorithms reach a significant technical level (support/resistance, supply/demand zones, previous highs and lows of sessions, days, weeks, months, imbalances, order blocks, 50%-levels, round numbers, option strike prices) and the market is trending lower, algorithms will activate and target that technical area. They recognize that the area is a support level. They also understand that they can manipulate investor emotions to make them believe that the market is bottoming out. 
 
Premium-Discount Zones for Short and Long Setups.

As a result, when the algorithm hits that technical area, it aims to trigger emotions that lead investors to sell or short in response to what appears to be a breakdown. These breakdowns are often referred to as "failed breakout trades," and they tend not to succeed. In fact, they fail in more than 80% of cases.

 
 » Some of the best trade setups are failed breakouts. «

Why? Because it’s a contrived effort by the mathematical logic of the algorithms, designed to make investors do exactly what the algorithms want. The goal is to get people to go short at the bottom and encourage long investors to sell their positions at the lowest point, clearing the way for an upward movement. 
 
First, shorts need to be covered. Then, longs who sold at the bottom will be motivated to buy back shares, creating another emotional impulse. Typically, this leads to a poor trade for those who sold too early.

» The goal is to get people to go long at the top. «
 
The same principle applies in both directions—whether the market is moving up or down. For instance, in a false breakdown, algorithms may manipulate the market to sell. In a false breakout, they may prompt buying. In both cases, the effect is similar: short covering and long investors buying at the wrong time. To sum it up, the algorithms exploit emotional responses. 
 
There is no support for short positions when the market is trending down, and the longs who are caught at the top are forced to sell. This creates the momentum for the market to move in the opposite direction.

 » 80% of Breakouts fail. «

This is why some of the best trades are failed breakdowns—buying against technical levels that are collapsing. This is when and where you should buy, while everyone else is being pushed out of the market. You don’t want to short a failed breakdown in a technical area, nor should you buy a breakout in such an area. Instead, you should do the opposite in these situations. 
 
» Algos do what they are programmed to do. They take no prisoners. «
 
My most successful trades, without question, occur when stop orders are triggered. People use stop orders to protect themselves from losses. This is where you should enter the market—against stop orders. If stop orders are triggered and the market has to sell down, you should buy. Conversely, if stop orders are triggered on the way up, you should sell. The key is to position yourself on the other side of stop orders.
 
To sum it up, algorithms are written by programmers, and have to be designed to go somewhere. Where do they go? To technical areas. Those algorithms are heading there, without a doubt. They aim to shake out longs and get people to go short or vice versa. 
 
So, what do the smart players do who are at the bottom of these algorithms, scooping up all this action? They feed into these people. That's the purpose of algorithms. We take advantage of what they give us. Printing money. That’s what we do. And we do it every day. 
 
You need to know the technicals, the levels, and pay attention to them. Technical areas are borders, and price history is how you identify and track them. Do multi-time frame analysis; understand what failed breakdowns and failed breakouts look like; double bottoms, double tops, pin bars, three-push-patterns, three-bar reversals, and M and W patterns, all the way down to the 1-minute chart. Find out what else VWAP, EMA (9), and Keltner can do for you.  
 
Wait for price to get to technical areas, and for reversal setups to form. Price to price, level to level, zone to zone. Don't chase trades; scale into them, as single-entry trades will kill you. Understand position management; know your stop-loss level, take-profit targets, and your R, and take what the market gives you. Consider taking partial profits and holding positions through a session close or daily close. Journal your trades; some of your best trades will be losing trades that help you learn valuable lessons. Keeping things simple is the key to success as a trader.

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