Opening Range Breakout
by Toby Crabel
In the opening range breakout technique, the heralds of an upcoming trend day are often inside days,
narrow range days and hook days (see Stocks & Commodities, September and October 1988). I also have
run across a new concept that categorizes price action and generally produces trending activity the next
I call it Doji Lines. Doji is a Japanese word describing a comparison between the open and the close of
the daily session. It is described in a book, The Japanese Chart of Charts by Seiki Shimizu.
A Doji Line is a day that shows a very small difference between the open and closing prices (Figure 1).
"Very small" is a relative term but, through observation, I have attached quantities to this open-to-close
difference to meet the need for definition.
In Figure 1, the left-hand bar is what a Doji Line looks like on a vertical bar chart; the right-hand bar is
how it is displayed by Shimizu. In this case, the close was less than the open, so the open-to-close range
is displayed in black. If the close had been above the open, the box would have been clear.
Figure 2 displays the Doji with a hypothetically defined narrow range day at point "a." We'll define
narrow range day in a moment, but for now suffice it to say that the action following point "a" represents
a trend day.