LiquidityLevelsPrevious Close
The previous close is the last price of the prior session. It is the baseline for measuring the overnight move and the size of the gap at the next open.
4 min read · Educational, not trading advice
What the previous close is
Each session ends with a closing price, and that price becomes the reference for the next one. For SPY and QQQ, the close is set by the closing auction at 4:00 PM ET. For ES and NQ, there is a daily settlement price as well, and the last trade of the cash-hours session at 4:00 PM ET, plus continuing trading after.
Because futures trade beyond 4:00 PM ET, the prior close for futures can mean the 4:00 PM ET print, a platform-specific futures close, or the official settlement price, and each may differ slightly. State which you mean when comparing.
Why it matters
The previous close is how gaps are measured. A gap up is an open above the prior close and a gap down is an open below it. It is also how traders describe the overnight move: ES up 15 points from the 4:00 PM ET close means the market has repriced higher while the cash markets were closed.
Many traders treat the previous close as a magnet. A market that has moved far from it overnight may be expected to revisit it. This is the idea behind gap fills. It is a common tendency in some conditions and it fails in others.
Close location within the range
Where a session closed relative to its range tells part of its story. A close near the high suggests buyers were in control into the end, and near the low the opposite. A close near the middle is described as balanced. The prior-day range calculator on this site computes the close location as a percentage.
This is purely descriptive. A strong close does not guarantee a strong next day, but it frames the starting condition for the overnight session.
Using it with other levels
The previous close is usually plotted alongside the prior high and low and the overnight range. The distance between the close and the current overnight price shows how much has changed. When the overnight price is near the close, the market is described as unchanged. When it is far away, there is something to explain, such as news or a strong trend in Asia and London.
A routine for the previous close
Record the cash close for SPY and QQQ and the 4:00 PM ET prices for ES and NQ. Each morning, compute the overnight move from that baseline in points and percent. Convert the ES move to an approximate SPY move by dividing by roughly 10, and the NQ move to a QQQ move by dividing by roughly 41.
Compare the result with the actual premarket SPY and QQQ prices. Differences are typically small, but they teach you how the basis between futures and the ETFs behaves, which improves your translations over time.
Dividends and the previous close
ETFs such as SPY and QQQ pay dividends and drop by roughly the dividend amount on the ex-dividend date. That drop can appear as a gap down even though nothing happened in the market. Futures prices are not affected in the same way. When comparing an ES overnight move with SPY on an ex-dividend date, adjust for the dividend, or you will think the gap is larger or smaller than it really is.
Worked example
Common mistakes
- Mixing different definitions of the futures close, such as 4:00 PM ET versus official settlement.
- Measuring the gap in ES from the wrong baseline.
- Assuming that price must return to the previous close because of the gap fill idea.
- Ignoring that SPY and QQQ ex-dividend dates reduce the ETF price on the ex-date without a corresponding market move.
How it connects to ES, NQ, SPY and QQQ
The previous close of SPY and the previous close of ES are linked by the ratio of roughly 10, but not exactly, because of basis and dividends. Use SPY close for ETF gap calculations and ES close for futures moves.
The LiquidityLevels converter and overnight gap calculator turn an ES overnight move into an approximate SPY reference relative to the previous close.
See it in the live map.
This idea is applied to the current ES and NQ overnight structure every session.