Comprehensive Guide on ICT New Week Opening Gap (NWOG)

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The New Week Opening Gap (NWOG) refers to the price gap between the market's closing price on Friday and its reopening on Monday.

NWOG gaps can be either bullish (when the market opens higher than the previous week's close) or bearish (when the market opens lower than the previous week's close).

This analytical method is used to analyze liquidity flow and implement ICT trading strategies.

Why Does NWOG Occur at the Start of the Week?

Trading halts at the end of the week, and the market closes. However, unexpected events such as wars, natural disasters, or political developments over the weekend may impact prices.

These influences are reflected in the market's opening price at the start of the new week, leading to the formation of a gap.

How to Identify a New Week Opening Gap?

To identify an NWOG, mark the closing price on Friday and the opening price on Monday. This price difference is called an NWOG or a liquidity void because no trades occur within this range.

Looking for an NWOG indicator? explore the following tools:

NWOG gaps occur when the Friday closing price differs from the Sunday opening price. These gaps often act as “liquidity attraction zones”, meaning prices tend to return to these levels to correct imbalances.

For instance, if a bullish NWOG appears without wicks at the start of the week, it may indicate strong buying pressure and an increased likelihood of a continued upward trend.

The Importance of NWOG in ICT Analysis

In ICT analysis, NWOG gaps are critical for identifying key support resistance levels and liquidity attraction zones. These gaps may indicate strong buying or selling pressure, helping traders anticipate price movements.

How to Trade NWOG?

Approaching the 50% level of the gap often results in significant price reactions, making it a strategic entry point. Use Fibonacci tools to determine the 50% level accurately.

Note: Fibonacci levels should include 0, 1, and 0.5.

Trading Strategies Based on NWOG

  1. Breakout Strategy: Enter a trade when the price breaks out of the gap range and continues in the same direction;
  2. Reversion to the Gap Strategy: Enter a trade when the price returns to the gap and reverses from the gap level.

Using Different Timeframes for NWOG Analysis

  • Weekly Charts: Identify NWOGs within the weekly framework and assess the overall market direction;
  • Daily and 4-Hour Charts: Confirm price movement toward or away from NWOG in lower timeframes;
  • 1-Hour and Lower Charts: Pinpoint entry points and observe price reactions near NWOG.

Bullish NWOG Trading

For bullish sentiment, the strategy splits into two scenarios:

#1 Price Above NWOG

When the price retraces to NWOG and shows reversal signs in lower timeframes, take a buy position targeting the next liquidity level.

#2 Price Below NWOG

When the price approaches NWOG and closes above it, use this level as price support for long trades.

Schematic of NWOG Bullish Trend
Schematic of Buy Trades in New Week Opening Gap (NWOG)

The EUR/USD chart on the 1-hour timeframe illustrates the behavior of NWOG in an uptrend.

NWOG Bullish Trend
Bullish Trading with NWOG (New Week Opening Gap)

Bearish NWOG Trading

For bearish sentiment, the strategy splits into two scenarios:

Price Below NWOG

When the price retraces to NWOG and shows reversal signs in lower timeframes, take a sell position targeting the next liquidity level.

Price Above NWOG

When the price approaches NWOG and closes below it, use this level as price resistance for short trades.

Schematic of NWOG Bearish Trend
Schematic of Sell Trades in New Week Opening Gap (NWOG)

The AUD/USD chart on the 1-hour timeframe illustrates the behavior of NWOG in a downtrend.

NWOG Bearish Trend
Bearish Trading with NWOG (New Week Opening Gap)

Comparison of Markets Using NWOG

NWOG's performance in different markets is as follows:

Forex

Weekly gaps tend to fill quickly

Stock gaps

Gaps are typically tied to company-specific news

Commodities

Global events significantly impact gaps

Cryptocurrencies

Irregular gaps occur due to the 24-hour nature of the market

Futures

Gaps are key indicators for identifying critical liquidity zones

Indices

Weekly gaps are more predictable than other markets

Conclusion

NWOG gaps help traders identify critical price levels and trading opportunities. These gaps are especially significant at the start of the week, reflecting the market's reaction to weekend events.

By combining NWOG with other analytical tools, traders can capitalize on the new week's opening gaps.

FAQs

How to Identify NWOG?

Mark the closing price on Friday and the opening price on Sunday to determine NWOG.

Which Markets Frequently Experience NWOG?

Forex, stocks, commodities, indices, and cryptocurrencies.

How to Use NWOG in Trading?

  • Reversion Strategy: Wait for the price to return to the gap level and trade accordingly;
  • Breakout Strategy: Enter a trade toward the gap if the price continues moving;
  • Support and Resistance: Use NWOG as support or resistance levels.

What Causes NWOG?

  • Economic and political news over the weekend;
  • Changes in market sentiment or risk appetite;
  • Liquidity imbalances due to pending orders.
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