Time-of-day and short-term patterns are combined in the most popular forms of day trading. There are natural occurrences during the trading day that make certain times more important than others. The opening gap and the continuation of that direction usually take the first 15 to 20 minutes of the trading day, as does the reaction to the U.S. economic reports that are released at 7:30 A.M. in Chicago. After that, a price reversal occurs and a trading range is established, which lasts until the middle of the session. The midmorning period, which may marginally expand the initial trading range, tends to include low volume because many of the orders originating off the floor (called paper) are exhausted near the open; floor traders take this opportunity for a break, further reducing liquidity.
Following midday, activity steadily increases and the existing daily range is tested. It is common for most day traders to buy the bottom of the range and sell the top. A break of either support or resistance after midday is considered a major directional change; traders quickly shift to the direction of the breakout with the expectation of holding that position for the balance of the day.