The First Reversal During the First Hour

I think I probably first learned about this setup from Al Brooks — the first reversal during the first hour of trading.   In other words, during the first hour of trading (preferably the first 30 minutes), if 2 bars or more establish a clear trend, then fade the trend on the first bar that violates the trend.   On a down trend, long the first bar that has a higher high than the previous bar; on an up trend, short the first bar that has lower low than the previous bar.

We can see that the setup works on the SPY 5 minute chart these past two days:

Of course, nothing is 100%.  Money management is paramount.  Don’t forget to set the stop loss orders as soon as the trades are entered.

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