A pattern scan is taken at 5:30 p.m. ET, in the halt before the 6:00 p.m. reopen, and kept until the next one. That is when these sessions have a finished high, low, and close, so the row is an end-of-day pattern. Earlier, the bar is still forming. After 6:00 p.m. the new session is left out until the next 5:30 p.m. scan. Friday's scan stays up until Monday at 5:30 p.m. ET. A holiday close can come earlier.
► Contraction occurs when a range stops expanding: a narrow-range (NR) bar, an inside day (ID), or several consecutive bars of either type, with the tightest range at the end of the contraction.
► Expansion is the breakout from that range, entered at the next open. A wide spread (WS) reading indicates that the breakout has already carried price beyond the prior range.
NR (Narrow Range): A price bar whose range is narrower than the previous bar. Its opposite is WS. Next to NR4, NR5, and NR7 it is technically NR2.
NR4 (Narrow Range 4): A price bar whose range is narrower than each of the previous three bars, marking the narrowest range in four bars. Its opposite is WS4. NR, NR5, and NR7 are also closely watched patterns.
NR5 (Narrow Range 5): A price bar whose range is narrower than each of the previous four bars, marking the narrowest range in five bars. Its opposite is WS5. NR, NR4, and NR7 are also closely watched patterns.
NR7 (Narrow Range 7): A price bar whose range is narrower than each of the previous six bars, marking the narrowest range in seven bars. Its opposite is WS7. NR, NR4, and NR5 are also closely watched patterns.
WS (Wide Spread): A price bar whose range is wider than the previous bar. Its opposite is NR. Next to WS4, WS5, and WS7 it is technically WS2.
WS4 (Wide Spread 4): A price bar whose range is wider than each of the previous three bars, marking the widest range in four bars. Its opposite is NR4. WS, WS5, and WS7 are also closely watched patterns.
WS5 (Wide Spread 5): A price bar whose range is wider than each of the previous four bars, marking the widest range in five bars. Its opposite is NR5. WS, WS4, and WS7 are also closely watched patterns.
WS7 (Wide Spread 7): A price bar whose range is wider than each of the previous six bars, marking the widest range in seven bars. Its opposite is NR7. WS, WS4, and WS5 are also closely watched patterns.
ID (Inside Day): A bar whose high is below the previous high and whose low is above the previous low, so the session sits inside the prior bar.
OD (Outside Day): A bar whose high is above the previous high and whose low is below the previous low, so the session takes out both sides of the prior bar.
IDnr4 (Inside Day Narrow Range 4): An inside day that is also an NR4. The bar sits inside the prior bar, and its range is narrower than each of the previous three bars.
2BNR (2 Bar Narrow Range): The two-bar range, higher high minus lower low, is the narrowest two-bar range of the last 20 sessions.
3BNR (3 Bar Narrow Range): The three-bar range, higher high minus lower low, is the narrowest three-bar range of the last 20 sessions.
4BNR (4 Bar Narrow Range): The four-bar range, higher high minus lower low, is the narrowest four-bar range of the last 30 sessions.
8BNR (8 Bar Narrow Range): The eight-bar range, higher high minus lower low, is the narrowest eight-bar range of the last 40 sessions.
Bear Hook: An NR with the open below the previous bar's low and the close above the previous bar's close.
Bull Hook: An NR with the open above the previous bar's high and the close below the previous bar's close.
Stretch: The 10-session average of the smaller open-to-extreme distance, open to high or open to low. It sets the distance for an ORB or ORBP entry and stop.
► The pattern forms yesterday; the trade is taken in the next session.
ORB (Opening Range Breakout): A trade at a preset distance (Stretch) off the opening range. The first side to trade is the position.
ORBP (Opening Range Breakout Preference): The same trade, taken in one chosen direction only.
Stretch is the entry distance, not a setup. The opening range is the first 30 seconds (In the glossary of Crabel's 1990 book, the Opening Range is the first thirty seconds of trade each day. The buy and sell stops sit one Stretch beyond that high and that low. The first hour is a different measure. Crabel calls that the Pioneer Range, and for stock indexes it runs from the open to 1:30. That is not the range the ORB stops are measured from.) A buy stop goes one Stretch above that high and a sell stop one Stretch below that low. On an ORB the first stop filled is the trade and the other stop is the protective stop. On an ORBP only the preferred side is working; if price trades Stretch the other way first, cancel, and place the protective stop only after the fill. Later tests in the book often used a fixed distance off the open and flattened on that day's close so every test shared one number. The operating rule is Stretch off the opening range.
NR, NR4, NR5, and NR7 do not pick a side. Take a two-sided ORB the next day. NR7 is the case he tested bar by bar: entry off the open, out on the close, and those trades beat an ORB taken on any day. ID is the same two-sided ORB, unless the market is already running, in which case drop the against-trend stop and take ORBP with the run. IDnr4 is the preferred case. It beat ID alone, NR4 alone, and an ORB on any day, and it is best when it ends a run of closes already pointing one way. 2BNR, 3BNR, 4BNR, and 8BNR are the same idea over a longer rest. Crabel defines all four. The longer the congestion, the more it is a springboard. He did not publish the same tick tests for these as for NR4 and NR7.
Hooks pick the side, so use ORBP. After a Bear Hook, sell only. Do not buy it. The exception is a gap up that holds through mid-session. After a Bull Hook, prefer the buy, and treat it as the weaker of the two. It is better if the next open is below the hook close; once that close is traded, upside continuation is the expectation. A fast move against the bias means stand aside.
WS, WS4, WS5, and WS7 are the expansion the contraction was waiting for, not a fresh setup. WS7 is momentum. An OD is the same class: both sides of the prior bar were already taken out. A True in those rows means the breakout day already happened.
► There is no fixed price target. The tested edge is the close of the entry day. A two- or three-day hold is allowed only if that session is already substantially profitable.
► The ideal fill is in the first ten minutes, with the open as one extreme of that thrust. A large move in the first fifteen minutes is an Early Entry, and continuation is the normal case.
► Move the stop to flat within an hour; on the S&P he used five to ten minutes. If price does not leave the entry, the trade is suspect. Scale out with more than one contract and trail the rest.
► A fill late in the day is the worst entry; cut the size as the session ages, or skip it. If you miss the break, one or two entries on a 3/8 to 1/2 retracement of the range already made are allowed, with the stop beyond the 5/8 level. A third retracement is not.
► Whichever side of Stretch trades first is the bias for the next two or three hours, even with no position. Do not fade that first move unless it is against the intermediate trend and the pattern agrees with the trend.
► The Day Before: Do not trade it every day. An ORB after a narrow day beat an ORB taken on any day. The session before should be a contraction: NR, NR4, NR5, NR7, an inside day, or a longer rest such as 2BNR through 8BNR. Those do not pick a side, so the next session is a two-sided ORB.IDnr4 is the case Crabel liked best. It beat an inside day alone, an NR4 alone, and an ORB on any day. An inside day in a market that is already running is not two-sided. Drop the stop against the run and take ORBP with it. A gap in the direction of that run is continuation. If the break fires the other way, do not take it.
Hooks pick the side. After a Bear Hook, sell only. The exception is a gap up that holds through mid-session. A Bull Hook prefers the buy and is the weaker of the two. It is better if the next open is below the hook close. A fast move against the hook means stand aside.
A wide day is not a new setup. WS and an outside day mean the expansion already happened. An upthrust, a spring, or a sharp reversal is followed with ORBP in the direction of the reversal for at least two days, if that direction agrees with the intermediate trend.
► Before the Open: Stretch is fixed before the open. For each of the last ten sessions, take the smaller distance from that day’s open to its high or to its low. The average of those ten numbers is Stretch.Choose the order from the pattern. ORB is two-sided. ORBP (Opening Range Breakout Preference) is one side only, used when the pattern or a running market has already named the direction.
► The Open: The opening range is the first thirty seconds. A buy stop goes one Stretch above that high. A sell stop goes one Stretch below that low.On an ORB both stops are working. The first one filled is the position. The other becomes the protective stop.
On an ORBP only the preferred side is working. The protective stop is placed after the fill. If price trades one Stretch the other way first, cancel. The preference is gone.
► After the Fill: The best fill is in the first ten minutes, with the open as one extreme of that thrust. On the S&P he expected the getaway in five to ten minutes. Move the stop to flat within an hour, sooner in a market that trends easily. If price does not leave the entry, the trade is suspect. Cut the size as the session ages. A fill near the close is the worst entry.There is no fixed price target. The tested exit is the close of the entry day. A two- or three-day hold is allowed only if that session is already substantially profitable. Otherwise it is a day trade. With more than one contract, take some off and trail the rest.
In the book's tests Crabel often dropped Stretch and used one fixed distance off the open, then flattened on the close, so every pattern could be compared with the same number. The rule for trading it is still Stretch off the opening range.
► If the Break is Missed: If the early break is missed, one or two entries are allowed on a retracement of three-eighths to one-half of the range already made, with the stop beyond the five-eighths level. A third retracement is not.► If no Trade is Taken: The first side of Stretch to trade is the bias for the next two or three hours, even with no position. Do not fade that first move unless it is against the intermediate trend and the pattern agrees with the trend.