The goal of this research is to find various set-ups and exit strategies that could be used for trading the opening range breakouts. Our research is focused on a popular trading principle called the opening range breakout.

We define that range as the first n-bars of minutes of a trading day. The logic behind this is when the NYSE market opens we have the highest trading volume. Especially during the first 15 minutes of trading. What makes the opening range an important trading concept is like we said the volume and the fact that traders act in response to recent news. The fact that important economic news are often announced at am makes it even more significant.

Our analysis will show if this argument holds true. The aim is to identify possible set-ups and exits that can help us in improving the opening range breakout trading system. The set-ups tested include volume spikes, time and volatility. The tested entry and exit strategies will be analyzed and explained. How about price and volume? A very important indicator is volume. Therefore we must analyze the volume too and add it to our trading arsenal.

The reason why you should use it is that high volume is an indication of high commitment to a position. The opposite is also true, if the price increases on low volume it indicates that the price is likely to retrace. For the better understanding of the trading volume on a particular day we will use a Stochastic Volume Index Indicator compare the volume today with the volume of the last couple of trading days.

The current value is expressed as a percentage between the lowest and highest that it has been over the previous X number of bars. The numbers will be between 0 when at the lowest to when at the highest. We calculate the value by using the close of each bar. When done correctly it should look like this :. When looking at the sample graph above you can already see why the opening range is so important.

Highest volume between am and am. Thereafter it dries up and we have one more spike right before the close of the trading session am till am. Every day the same game.

To analyze the opening range breakout we have to understand the dynamics behind it. The assumption is that a gap up day should further increase our confidence when trading the opening range. A gap up tells us traders are already going long and we had a lot of unfilled orders the previous day which are executed at the opening. This further underpins a bullish trend. The winning percentage is low but the Payout Ratio of 3. You remember what we tried to proof? Obviously the results can be improved by fine tuning our exit technique.

When we analyze the trading results by trading day of the month we have the strongest gains during the first week of the month. This is just our interpretation. What if we test only the breakout without the gap up day. Strategy rules are the same as above with the exemption that we do not need a gap up day to enter the trade. The overall percentage comes down to The return percentage of The Kelly Pct.

Adding the market opening gap as an additional set-up for our trade entry improves the Kelly Pct.We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies. You can learn more about our cookie policy hereor by following the link at the bottom of any page on our site.

Note: Low and High figures are for the trading day. Are you a frequent DailyFX visitor or a first time visitor? We would love to hear your feedback on our site. We would appreciate if you took minutes to take a survey and tell us how we are doing.

Some markets are more tuned towards congestion than others. In general, the broader markets are proving predisposed to congestion versus productive trends. If the financial system is due to keep its congestion in place, probabilities would suggest finding markets where congestion is well set. Crude oil presents once such option.

US oil has developed a much different tempo over the past four months than what we had seen over the opening four months of Yet, with that peak in late April, the consistency fell away. The accelerated drop in May was a large slump, and the swings that have taken shape since that correction have been of shorter duration and reduced their reach. This has turned into a clear descending triangle with extreme bounds at 59 and 50, but there is also a wedge that has formed just in August which pulls a more immediate floor of Therefore, volatility in the week ahead an be expended on getting us back to the top of congestion or forging a breakdown that would still fit a broader range.

Chart created with the TradingView Charting Platform. Looking at the higher time frame chart dailywe can register that there is at least a higher level of activity against a diminishing range.

Opening Range Breakout Indicator for ThinkorSwim

That is the combination that usually leads to technical breaks. The day ATR is cooling, but it is still substantially higher than the lull we developed during its steadying through the opening phase of the year. Meanwhile, the historical range over the same period has contracted. As a percentage of spot, we are looking at a quiet that is comparable to the pacing in the second quarter.

When it comes to what is directing the commodity, there is absolutely a connection to the underlying health of the capital markets. Risk trends reflect a good semi-fundamental guidance for the commodity, but — as with most assets — there is a distinct deviation from the performance of pacesetters like the Dow below in green.We use a range of cookies to give you the best possible browsing experience.

By continuing to use this website, you agree to our use of cookies. You can learn more about our cookie policy hereor by following the link at the bottom of any page on our site. Note: Low and High figures are for the trading day. Crude Oil prices are down more than 1.

These are the updated targets and invalidation levels that matter on the oil price weekly chart. Review my latest W eek ly Strategy Webinar for an in-depth breakdown of this Loonie price setup and more.

Crude Oil: Hourly Chart Breakout

New to Forex Trading? Get started with this Free Beginners Guide. Note that weekly RSI has broken below a multi-month support trigger with no break in price to validate the momentum shift — risk for some sideways action here for now. Initial resistance is eyed at A break lower from here exposes critical support at Bottom line: Oil prices have been testing this key support barrier since June and while the broader risk remains lower, the short-bias remains vulnerable while above the 51 -handle.

From a trading standpoint, looking for topside exhaustion on recoveries ahead of See how shifts in Crude Oil retail positioning are impacting trend- Learn more about sentiment! Previous Weekly Technical Charts. DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

crude oil opening range breakout

Leveraged trading in foreign currency or off-exchange products on margin carries significant risk and may not be suitable for all investors. We advise you to carefully consider whether trading is appropriate for you based on your personal circumstances. Forex trading involves risk. Losses can exceed deposits.One of the first trading scenarios and potential trade setups that a trader is often introduced to is the range breakout. This is possibly because a range is easy to spot, and knowing when to enter is relatively easy — i.

While there is a belief that range breakouts can provide extraordinary returns, as the security is launched out of its holding pattern, trading range breakouts is an unprofitable endeavor for most novice traders. This article explores three reasons why and offers two alternative strategies.

crude oil opening range breakout

For background reading, see our Technical Analysis Tutorial. By the very nature of a range, it is likely to have multiple false breakouts.

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While filters can be added to reduce the number of false breakouts that are traded, these losing trades cut into profits that are made by trading a legitimate breakout. Price then retreats back to the entry price just outside the range. Often, this price action results in the trader taking a very small profit or another small loss because he or she now feels that this is likely to be another false breakout. The price corrects, moving back to the range breakout point, and then takes off again in the breakout direction.

The trader watches in frustration at having gotten out of the trade on the correction only to see that it was in fact a breakout. According to Charles D. Kirkpatrick and Julie R. Combine this with the high rate of false breakouts, and most novice traders lose money on the gyrations and end up missing the big move when it occurs. While this profit target is reasonable, explosive gains do not happen as much as the novice trader thinks.

While range breakout examples are often used to show a stock or commodity breaking out and making a large percentage gain, with potentially hundreds of ranges being traded in different instruments in markets around the world, what is the likelihood of picking the few that will eventually explode?

The probability is not high. And given the other two problems with ranges mentioned abovewhat are the chances the trader will be in the trade when that move finally does occur? For most novice traders, trading range breakouts will be a losing strategy. False breakouts will result in losses, corrections will fake traders out of legitimate moves, and explosive gains are rare considering the many potential ranges available to trade.

But while a range breakout may be difficult to trade profitably for many traders, there are alternatives using the same chart pattern that give the trader a better chance at success.

Ultimately, the trader must give up the desire to get in at the very start of a potential move. To learn more, see: Trading Trend or Range? Both of these methods greatly reduce the chance that the trader will be stuck in a false breakout. Once the breakout has occurred and made its first move, it is easier to step in at that point than it is to jump in right at the level that many other traders are watching. Patience will allow the security to make its move and reveal whether the breakout has actually occurred or not.

At this point, the trader can move into a trade to capture the trend, which now appears to be underway or likely to emerge. Ranges are easy to spot, making the range breakout strategy very popular. However, many traders lose money on this strategy, mainly because of false breakouts, corrections to the breakout point and unrealistic expectations. Strategies that are likely to provide traders with more success involve being patient and waiting for the breakout to happen and then trading the trend if it occurs, or waiting for a correction and seeing if the price resumes the breakout direction.

Technical Analysis Basic Education. Day Trading. Your Money. Personal Finance. Your Practice.Click here for more information about our publications! All rights reserved. Free Trial.

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Free Trial Reader Service. Contact Us Affiliate Advertising Help. Str Comparative Rel. Pendergast, Jr. The April crude oil futures contract has completed a successful - and powerful - bullish breakout on its hourly time frame.

Here's a closer look. Figure 1. Crude oil futures are among the most widely traded, universally watched commodity markets in the world — easily as capable of making sustained intraday swing moves as they are able of producing powerful multimonth year trend-following mega-moves. That's what has just happened on crude's hourly chart of the April '14 contract, setting up a low risk, high reward, long swing trade entry worthy of any serious trader's attention.

Here are the primary items of interest for those bullish on near-term crude oil futures: 1. The primary trend of the hourly, daily, and weekly contracts are all in bullish mode — with the weekly chart just crossing to the upside Figure 2. The average directional movement index ADX is rising on all three of those time frames. All three time frames have bullish KV trend scores ofandrespectively, with the daily and weekly charts also confirming 'base long' chart patterns that also imply more upside potential.

The hourly minute chart for CLJ14 reveals an impressive bullish leap higher out of a multiday trading range rectangle on price bars ; also note the extreme wide range of the breakout bar and its trend score green dot on the chart, one that has an uber-bullish trend score. Some breakouts fail after a lukewarm attempt at a breakout, but there can be little doubt here regarding crude's near-term price direction intentions, especially given the confirmed bullish trend indicators on the contract's daily and weekly charts.

Note the normal pullback toward key support following the massive surge on the break; typically, a successful breakout will drift back toward, if not actually touch, its bar simple moving average gold dashed line before reversing to move in the same direction as the initial breakout thrust.

Figure 2. CLJ14's hourly chart reveals an ultra-wide range bullish breakout bar, one that has a trend score ofone of the highest rankings possible. A pullback toward the gold bar average sets up a low risk, high potential long trade. Trading April crude futures here is very basic; watch the minute chart for signs of a fresh bullish surge and then go long on a break above the hourly bar that confirms a new upswing is underway.

Once in the position, set your initial stop several ticks below the ultimate low of the current pullback and look to scale out or sell out of your trade if There is strong weekly chart resistance at For traders skilled with futures options, you might also want to consider selling out of the money puts with a strike price of Regardless of the way you choose to play April '14 crude, just make sure you keep your account risk small and your profit and risk control exit points always in view at all times.

Trade wisely until we meet here again. Donald W. Freelance financial markets writer and online publisher of the Trendzetterz. Comments or Questions? Article Usefulness 5 most useful 4 3 2 1 least useful. Park Avenue Consulting.What's new New posts New profile posts. Market Sentiment. Log in Register. Search titles only. Search Advanced search….

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crude oil opening range breakout

Thread starter BenTen Start date Dec 19, Prev 1 … Go to page. First Prev 11 of 15 Go to page. Talochka Member. BenTen said:. Talochka Already mentioned it in message Scroll up a bit and you should see it. BenTen Administrative Staff. Talochka So what's the problem? Is this related to the day light saving timezone that Playstation was asking about earlier?

BenTen, I need help with this:. Talochka I don't have a lot of knowledge on futures trading time, so I can't help. It seems like you're not the only one experiencing such issue. Maybe someone else on here who trade futures can help. We share our seven secrets to crude oil futures success here. Hello all, new user here and I've been checking out the site. I began using the ORB indicator and from my understanding and from the postit's advisable to go long when the price closes above that breakout zone, my question is, how do I scan for stocks that are currently breaking that plane?

I tried the script in the post for the scan but I get some very strange stocks in return. I have read the author's notes and a few things remain unclear, where are the probable close direction points And if I'm using a 5m chart, can I move to 1hr without altering the code?

Thanks for the help and I appreciate the time. Run that on a 5 min aggregation scan. A breakdown bearish scan can be written in no time Code:. ORB Breakdown Scan tomsk Hey Tomsk, I appreciate the help and quick response.Oil, after looking rangebound for a while, albeit at the highest levels sincelooks like it has broken out.

A couple of days ago, however, we broke through and have been trading above that point for three days now. That confirms that WTI has broken out of its range, but the lack of follow through since suggests that this may not be all that significant.

An analysis of the reasons for the breakout and the price action since, however, suggest that it will be. The first question that heeds to be answered is how significant any technical signal is in the longer term. The answer is not very. Even big-picture, clearly visible technical analysis such as this can only take you so far.

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The break of a level often triggers stop loss orders clustered around it, so can cause a quick jump that traders can exploit intraday, but over time more powerful fundamental forces hold sway. It is those fundamentals that forced oil higher this week. The demand factors that have been in play for nearly a year now are well known.

crude oil opening range breakout

Improving global and U. What changed this week, however, was the supply side of the equation. Conventional wisdom has held that that was a restricting factor for oil prices. The seeming ability of North American shale producers to turn production on and off in response to price moves suggested that the run up would prompt big increases in supply.

That is still a possibility, but what changed this week was the supply picture elsewhere. Middle East tensions and conflicts are nothing new for oil traders, nor for anyone else for that matter. They have existed for millennia and the occasional flare-ups are sometimes taken in stride by the market.

There are calls for a reaction greater than the targeted strikes employed by President Trump last time and that has traders worried. There has been talk from OPEC this week about extending their production cuts into next year, but if the proxy war in Syria heats up the prospect of a unified front by the signatories to that agreement are seriously reduced. If the Vienna agreement were to break down just as U. All of that, however, is speculation, and if we return to the recent price action there are suggestions that the market is not worried.

That indicates one of two things. Overall, then, while technical levels and breakouts are not usually too significant in the long term, the lack of volatility following the initial push upwards suggests that this one may be.


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