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 and you might take fBO setup trades:

• 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
• b2 is an OB that does not have a close near the extremity.
• b1 is an OB and it overlaps with the prior day's last bar completely.
• 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 large bull legs and 2 large bear legs. (including opening gaps)

Here are some features the Opening Range will probably soon BO and you should not take the fBO setup:

• When a bar closes far beyond the prior range/bar. The distance between the close and the BO point should be at least half the size of the BO bar.
• Consecutive bars of the same color with trending closes.
• b1 is a big trend bar to widen the Open gap.
• The Trend Generator setup. (W DT/DB at EMA).
• Already leg5 in TRs or at least 2fBOs on each side of the TR.
• Previous fBO setup can no longer travel to the opposite regime of the TR.

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.