better call them Guidelines 🙂
The open starts with either a trend or a trading range.
- Basically bar 2 tells you if you are in a trend or a trading range.
- When you get bar 1&2 in opposite directions, you already know this is probably a trading range.
- If bar 1 is a large bar with tails on both ends, it is a possible trading range bar.
- An outside bar 2 is also signalling trading range price action.
- A misplaced Reversal Bar (e.g. a bull RVB at the high of yesterday’s range or a bear RVB at the low of it) can be the opening range as well.
- When a bar closes beyond the prior range/bar it is an attempt to trend (a trend attempt – TA).
- Consecutive bars of the same color with trending closes is probably a trend attempt too (think micro channel – MC).
Setups to look for
- when the Open starts as a trend, ie. “Trend from the 1st bar” (T1B), look for a “1st pullback” (1P)
- when the Open starts as a trading range, look for a failed breakout (fBO) and breakout pullback (BP), if the OR is large enough
If you’re not sure, let the trend break and take the next with-trend trade.
more on the Opening Range here: