9/6/2021 Opening Range Breakout in Detail - Intraday Trading Course

Price Action
 How to Study Candlestick
Opening Range Breakout
 Candlestick Analysis 
Back to: Trading with Smart Money
 Price Action Analysis
 Advanced Price Action Analysis
 Thrust Pullback and Measuring
Move Analysis
 How to Trade with Smart
Money
 Supply and Demand Zone
Trading
 How to Day Trade with Trend
 Multiple Time Frame Analysis
 Head and Shoulder Pattern
 How to Trade with Support and
Resistance
 Advanced Candlestick Analysis Opening Range Breakout
 Trendline Trading Strategy
 WRB Trading Strategy In this article, I am going to discuss the  Opening Range Breakout  in detail. Please read our previous article where we
discussed Opening Range Trading Strategy with examples. At the end of this article, you will understand the following pointers in
Day Trading Strategies detail.
 VWAP Trading Strategy
 Gap Trading Strategy  1. What is the opening range?
 Intraday Open High Open Low
2. What is opening range breakout?
3. Opening range breakout types
Trading Strategy 4. Breakout entry for volume and price action
 PIN BAR Trading Strategy 5. After entry volume and price action
 Trading with Sideways Price
Action Area What is the Opening Range (OR)?
 Pullback Trading Strategy
The Opening Range is the difference between the first high and low of the day. How to find high and low? At least one candle
 Intraday Breakout Trading should be completely against the initial move
Strategy
Risk Management
 3 Techniques for Risk
Management in Trading
Stock Selection & Live Scanner
 How to make own Day Trading
Scanner
 Stock Selection for Intraday
Trading
Intraday Trading Course 2020
 Intraday Trading Course
 Multiple Timeframe Analysis for
Intraday Trading 
 VWAP Trading
 Opening Range Trading
Strategy
 Opening Range Breakout

Volume Price Action Analysis

 Volume Analysis in Trading
 Volume Price Action Analysis
 Volume Spread Analysis in
Trading
 Candlestick Pattern Analysis
 Finding Entry Opportunity using
Volume Spread Analysis
 Spring and Upthrust Trading
Strategy
 VSA Trading Strategy

Option Chain Analysis

 Option Chain Analysis

Indicator  The benefits of Opening Range Breakout Trading

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 RSI Trading Strategy There are several benefits to trading breakouts. For example…

BTST  Momentum is with you – Trading breakouts allow you to enter your trade with momentum at your back
 BTST Trading Strategy Catch big trends – If you were to trade pullbacks, sometimes it may never come. But with breakouts, you never have to
worry about missing another move in the markets
TECHNICAL ANALYSIS It gives us defined entry and exit (stop loss) points.
MASTERCLASS
 Technical Analysis
Demerit Opening Range Breakout Trading

 Market Structure  False breakout or smart money trap

 Understanding Market Maximum time breakout failed
Structure through Swing 
 Supply and Demand Trading
So breakout should be traded at a proper time. Here are two approaches to trading the breakout designed to minimize risk:

(Part – 1) 1. Buy the initial breakout when the conditions are right
 Supply and Demand Trading 2. Buy the retracement to the breakout when you need confirmation
(Part – 2) 
Tips:- When opening range is not clear, stay away from opening range trading market
Chart Patterns 
 Top 7 Chart Patterns in Trading Opening Range Breakout
Every Trader Needs to Know
 How to Trade Bull Flag and Bear Note-Now onwards we will discuss only bullish breakout. Exact opposite for bear breakout

Flag Pattern
Opening Range Breakout players
How to Become a Successful
Trader 1. professional
 How to Become a Successful 2. Those traders who have shorted the market will now be forced to cover their poor positions by buying as well. Short
Trader covering buy order above the opening range high
3. those traders not in the market may feel they are missing out and will be encouraged to start buying
Principle for an opening range breakout

Identify how much a stock retraces relative to how much initial move in the opening range.
Pay attention to the reaction and how stocks tend to act during this period
And the volume activity during the opening range period

Based on the above three-pointers we have divided the opening range breakout into 3 types. These are

1. Opening range breakout

2. Opening range Accumulation breakout
3. Opening range Absorption breakout
What is Opening Range Breakout?

Opening Range Breakout means price moves below well-defined support (opening range low) or above resistance (opening range
high)

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Logic

Opening range breakout depends on open 3 factors

1. Strong initial move (1 or more than one candle)

2. Price consolidate at opening range high(Flat pullback)
3. An unusual volume in the opening range
Strong initial move

These are the directional move with smart money participation and conviction. If at the start of a trading session. An Open-Drive
is generally caused by participants who have made their market decisions before the opening bell. The market opens and moves
aggressively in one direction.

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Price consolidate AT opening range high

In strong trending markets, you’ll have Flat pullback (price consolidates high of the day). That usually stock move in horizontal, low
volatility trendless manner. Most of the trading is near one end of the range. A Structural Feature Sign of Strength Price holds
gains after an up move “Eating through” residual supply

OVERLAPPING BAR hugs the level. It shows his level is no longer a strong reference point, The price will move with the
current pressure. If the level is strong then the price should react immediately
retailer’s taking profit to reduce risk .market pulls back and goes sideways. Once bulls confident that the bears will fail to
reverse the trend, bulls buy again with the tighter stop loss(if find this pattern find the middle of the trend)
Price should above vwap
Price should not break opening range high
Price consolidate within a tight trading range

Volume

Initial move volume should be clearly expansion than previous day volume

Why high volume on the initial move of the day?

We are trying to identify what the SM sentiment is for the day? If Smart Money wants to buy stock, we would see that on the open
with high volume and strong directional move.

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Rules for an opening range breakout

1. Wait for the first initial move to complete. should be a strong candle
2. Volume should be clearly expansion than the previous day
3. Price consolidating at a high of the day(flat pullback)
4. High of the opening range should not break
5. Declining or lower volume on retracement candle
6. The price must be above vwap
7. Entry above opening range high
8. Stop loss below opening range low

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BELOW ARE SOME MORE EXAMPLE GIVEN ANALYSIS YOURSELF

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Opening Range Accumulation Breakout Strategy

logic

The big institutions who move and manipulate the market build up their massive trading positions in a well-defined trading range.
After they fully enter their positions, then they initiate strong and aggressive buying or selling activity to move the price. They strive
to move the price in the direction of their newly accumulated positions.

May be happen at opening range high or above the opening range

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Characteristics of re-accumulation

Immediate background must have strength. Strong move

Re accumulation areas are generally in a well-defined range.
Reaction volume remains low and volume increases at support
Upthrust and spring can be appear
Springs at lows are the best indications of ACCUMULATION.
Failure of price to break support after basing above it
Stronger BULL candles in the range
Price Above vwap

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Opening range Absorption breakout

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Smart money observing supply at resistance. Means smart money observing supply coming from, long liquidation, profit-taking,
and new short selling.

Characteristic of Opening range Absorption breakout

Immediate background must have strength. Evidence of demand overcoming supply

When viewed as a correction, absorption areas are generally shallow.. The main characteristic of BUYERS overcoming
SELLERS is the repeated inability of prices to REACT away from opening range high.
Reaction volume remains low
rising supports and expanding volume on up‐swings
AFTER upthrust(breakout failure), the price unable to move down and unable to break the last swing low

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After entry

breakout candle

Clean wide range candle close above the opening range high

Breakout volume

Should be high or above high. Why?

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If you see high volume accompanying wide spreads up, this shows that the smart money was prepared to absorb any
selling from those locked-in traders who decided to sell In this situation, the market-makers anticipate higher prices and are
bullish.
High volume breakout should follow through

The danger signs to watch for at the breakout is the opposite price pattern. If the stock breaks out on good volume but immediately
reverses and trades below the breakout point on continued big volume it means that there is too much supply at the new high
price. This is a major warning sign. The big volume at the breakout will now represent significant resistance if the stock is below it.
This pattern of a big-volume reversal at the top of the OR usually leads to a failed breakout and a selloff.

Average volume breakout

Often the breakout will occur on light volume but as the stock climbs the volume will increase. This is also a positive sign.

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BREAK OUT NEEDS FOLLOW-THROUGH

Why breakout needs follow-through?

For confirmation for successful breakout

Avoiding smart money trap (stop loss hunting)

Smart money trap

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Hunting the stops is a phrase that describes a situation where smart money pushes the stock to trade above (resistance) a certain
price because they expect that there is a lot of resting orders to buy the stock if it trades above that particular level. The motive for
doing this is that if the trader buys the stock to trigger an advance through the price then the flurry of stop orders will push the price
even higher, at which point the trader would sell the stock to the stop orders being executed. If a breakout is created by a large
number of stop orders being executed, the subsequent price action will usually be an immediate reversal back into the range. An
immediate reversal is therefore a warning sign that the breakout is not going to be clean!

For confirmation for successful breakout

Traders like to see a confirmation after the breakout. One more bullish candle after breakout candle. A bull break followed by a bull
break is a sign of follow-through and thus an indication of bullish enthusiasm, for as long as it lasts.

If the price up to and the volume also high and also the price remains above its opening price after the early morning
pullback, it is an excellent sign that the stock has further to go on the upside.

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Please watch the following video if you want to learn and understand the Opening Range Breakout concept in a better way.

In the next article, we will discuss two more price action opening range entry. Here, in this article, I try to explain the Opening
Range Breakout  in detail. I hope you enjoy this article. Please join my  Telegram Channel  to learn more and clear your
doubts. https://t.me/tradingwithsmartmoney.

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Opening Range Trading Strategy Volume Analysis in Trading

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