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The opening range breakout is a trading indicator that returns true when a stock, an ETF or any other asset breaks the high or low of the first hours or minutes of a trading session (opening range).
You define a number of minutes and the indicator plots the high and low of the opening range (When applied to an intraday chart) and returns a signal when the price closes above the high or below the low.
As I said previously, the opening range period is defined by the function argument: number of minutes. To detect one-hour opening range breakout, simply set "60" as parameter in the trading indicator function.
It is important to keep in mind that any other time-series or technical analysis indicator can be set in place of the close series. You can for example detect opening range breakout of the volume.
The function name is "OpenRangeBreakout" and the previous example could be written as:
rule = OpenRangeBreakout(volume, 60) == 1;
Here is an example of a trading strategy based on the opening range breakout:
Buy = OpenRangeBreakout(close, 60) == 1 && volume > 10*sma(volume, 5);
The trading system enters a long position when an opening range breakout occurs with a high increase in trading volume.
Note that the opening range breakout return 1 when it detects a breakout from the high. It returns -1 when it detects a breakout from the low.
