Here are three things I focus on at the start of trade each day:
1) Have we been seeing bullish or bearish sentiment going into the open (blue lower arrow)?
2) Where are we building volume and accepting value (black arrow at right)?
3) Where are we trading relative to the day's volume-weighted average price (green arrow)?
This provides excellent context for the overnight trade. Our challenge is to place this context within the larger market context and time frame. In the case of today's trade, we saw significant buying on Friday after the selling on the unemployment number. Any breach of that Friday low would represent fresh selling pressure and lead us to question the short-term uptrend.
Conversely, if we can hold the Friday lows, we've set up a trading range defined by those lows and yesterday's highs. It's out of that framing of the day structure, that we can generate promising trade ideas. More on that later today.