Category:FBO

fBO setup: Failed Break Out of the Opening Range.

When the market opens, bulls and bears tend to have their biases on how the day is going to setup. This creates huge uncertainty of the Opening market. When the Opening Range is large, experience traders tend to fade the BO should the BO look weak and there is clearly a disagreement from the opposite trading side.

* Notice that fBO is slightly different from 1Rev. 1Rev is the first Reversal setup on the day and it usually means there is already a trend on the day.

Consecutive fBO setups are common in TRDs. However, in general, most traders should avoid fading the BOs after 2fBO has already played out.

Here are some features signaling a potential Opening Range:

• b1 and b2 are two trend bars with opposite directions and highly overlaps one another.
• b1 is a big doji like bar with huge tails on both ends
• the 1st 5min, 15min, 30min bar is a Misplaced Reversal Bar (MRB).
• the open is at mid range of yesterday and yesterday has a small day range.
• the open has 2 bull legs and 2 bear legs. (including opening gaps)

When a trader feel there is a high chance for the Opening Range, the trader may conclude that he should fade the BO instead of betting on the BO.