The ICT New Day Opening Gap, often called the ICT NDOG, is an idea that helps traders understand how price behaves as one trading day transitions into the next. In basic terms, it is the gap created between the market’s closing price at 5:00 PM New York time and its opening price at 6:00 PM New York time. This one-hour pause happens Monday through Thursday, leaving a space on the chart when trading starts again. On Fridays, the market closes for the weekend, and the gap seen when it reopens on Monday is known as the ICT New Week Opening Gap.
Identifying the ICT NDOG on Your Charts:
To spot the ICT NDOG, look at the closing price at 5:00 PM New York time and then note the opening price after trading restarts at 6:00 PM. The difference between these two prices creates the NDOG. Traders track these gaps because the market often returns to fill them, viewing them as fair value areas. These gaps can act like magnets, pulling price back into them before the market continues its journey.
Why the NDOG Acts as a Magnet for Price:
The reason NDOGs attract price action is that the market seeks fairness in the way it distributes orders. The gap represents an unbalanced area where price may need to re-balance. By watching how price returns to these zones, traders can better predict turning points, areas of support or resistance, and possible trade entries. Once you mark the NDOG on the daily chart, it can be helpful to shift to lower time frames, like 15-minute charts, to pinpoint more precise trading opportunities.
The Concept of Consequent Encroachment:
Inside each NDOG lies a midpoint often called the consequent encroachment. This level, found by taking the 50% mark of the gap, can become an especially important price zone. To find it, traders use a simple Fibonacci tool set to 0, 0.5, and 1. By measuring the gap’s high and low, the middle line at 0.5 becomes a line in the sand, where price often reacts strongly. Understanding this midpoint helps traders plan their trades more confidently, whether they expect price to bounce from this area or break through it.
Using the NDOG as a Reference for Fair Value:
ICT recommends keeping track of at least five recent NDOGs from Monday through Friday. By doing this, traders gain a clear idea of where price might be considered fair value. Over time, these gaps often develop into support or resistance levels, and they can become key areas where price pauses, accumulates orders, or reverses direction. They may also serve as draw-on-liquidity points, guiding traders toward potential targets as the market moves.
Applying the NDOG to Bullish Scenarios:
If your bias is bullish and price is already above the NDOG, consider waiting for price to return to this gap. When price tests the NDOG and shows a market structure shift on a lower time frame, it can signal a chance to go long. This approach aims to buy at what you believe is a fair value level, targeting higher liquidity points above.
When price is below the NDOG but you still have a bullish outlook, watch for it to climb back above the gap and hold there. Once it does so, the gap often transforms into support, reinforcing your bullish view and helping you identify a solid base for trades aiming for higher price levels.
Applying the NDOG to Bearish Scenarios:
For bearish scenarios, the process is reversed. If you believe prices will fall and they are already below the NDOG, wait for price to return to the gap and show a bearish market structure shift on a lower time frame. This can indicate a chance to sell short from a fair value level, aiming lower into fresh liquidity pools.
If price is above the NDOG and your bias is bearish, watch for it to slip back below the gap. Once the market holds beneath it, the NDOG often acts as resistance, giving you a reference point from which to manage a short trade setup.
Conclusion:
While the ICT NDOG concept is not a guaranteed system for profit, it can greatly improve your understanding of price action. As you practice identifying these gaps and observing how price interacts with them, you learn to recognize potential turning points and filter out noise. Over time, integrating NDOG analysis with other trading tools and techniques can help you refine your approach and grow as a trader.
FAQs
The ICT NDOG helps traders understand where price may return to find fair value. By identifying the gap between the 5:00 PM close and the 6:00 PM open, traders get a reference point that often acts like a magnet, guiding price back to rebalance before making its next move.
Start by identifying the NDOG on a daily chart, then zoom in to a 15-minute or even 5-minute chart. Look for signs of a market structure shift at the NDOG or its midpoint (the consequent encroachment). These signals can help you time your entries and exits more accurately.
The midpoint, known as the consequent encroachment, is often a highly reactive price level. When the market reaches this line, it can provide valuable clues about whether price will bounce, break through, or shift direction, helping traders make more informed decisions.
Keeping an eye on several recent NDOGs, usually from Monday to Friday, offers a broader view of where fair value lies. These levels can become valuable support or resistance zones, guiding you toward better entry points, exit targets, and overall trade management.
No trading approach can guarantee success in every market condition. While the NDOG concept is widely applicable across Forex, indices, and commodities, it is only one tool among many. Combining NDOG analysis with sound risk management, market fundamentals, and other technical strategies can lead to more consistent results over time.