Opening Range Breakout
by Toby Crabel
Bear hook is a day in which the open is below the previous day's low and the close is above the
previous day's close with a narrow range relative to the previous day (Figure 1). As implied by the name,
there is a tendency for prices following a bear hook pattern to move to the downside.
Figure 2 tabulates how this downward tendency after the pattern manifests itself in different markets and
with a variety of opening range breakout (ORB) trades taken the day after the pattern appeared.
Figure 3 charts the bear hook patterns for December T-bonds. Notice the price action on the day
following the patterns and the market's tendency to place the open on the high of the day.
Very briefly, an ORB is a trade entered at a predetermined amount above or below the opening range (the
range of prices that occur in first 30 seconds to 5 minutes of trading). The predetermined amount, or
"stretch," is the 10-day average of the differences between the open for each day and the closest extreme
to the open on each day.