Discussing the article: "Price Action Analysis Toolkit Development (Part 28): Opening Range Breakout Tool"
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Check out the new article: Price Action Analysis Toolkit Development (Part 28): Opening Range Breakout Tool.
At the start of each trading session, the market’s directional bias often becomes clear only after price moves beyond the opening range. In this article, we explore how to build an MQL5 Expert Advisor that automatically detects and analyzes Opening Range Breakouts, providing you with timely, data‑driven signals for confident intraday entries.
On May 6, 2010, U.S. equity markets endured the notorious “Flash Crash,” a breathtaking collapse in which a massive, algorithm‑driven sell order in E‑Mini S&P 500 futures triggered frantic high‑frequency liquidations and sent the Dow plunging nearly 1,000 points in just minutes before an equally swift recovery. This dramatic episode exposed a critical vulnerability: reacting to an unconfirmed price breach, no matter how emphatic, can leave traders stranded when liquidity evaporates and the market snaps back.
A breakout occurs when price decisively moves beyond a clearly defined boundary, such as the high or low of the session’s opening interval, signaling that supply or demand has overwhelmed the opposite side. Spotting genuine breakouts is essential because true breakouts often mark the start of sustained trends, while false breakouts, if acted on prematurely, lead to whipsaw losses.
The Opening Range Breakout (ORB) strategy addresses this by first capturing the upper and lower limits of that opening interval (configurable to any duration) and shading the range on the chart as a rectangle. These bounds serve both as visual landmarks and precise trigger levels. Only when price breaks beyond the rectangle, revisits that boundary, and breaks out again does the strategy confirm entry, filtering out noise and isolating moves driven by actual market conviction.
Author: Christian Benjamin