Next-session opening-range rules after a bear hook

The prior-bar bear hook

A bear hook is a session that opens below the prior session's low, closes above the prior session's close, and has a narrower range than the prior session. That single-session open-high-low-close condition is the candlestick pattern used here. It is the prior-bar filter that changes the next session's stretch rules. It does not fire an entry on the bar that prints it.

A next-session filter, not a same-session entry

The bear hook is applied as a next-session filter on opening-range-breakout variants, not as a same-session entry signal. A rule-based entry fires only when the defined prior-session bear-hook condition and a same-session stretch level are both present.

Opening range and stretch

The opening range in this breakout procedure is the price interval formed in the first 30 seconds to 5 minutes of the session. Stretch is the 10-session average of the distance from each session's open to the nearer extreme of that session. It is used as the offset from the opening range.

The default opening-range-breakout entry places a buy stop one stretch above the opening-range high and a sell stop one stretch below the opening-range low, and takes whichever stop fills first.

Which stop may be taken

After a bear hook, the next-session procedure also tests fading the stretch: selling the upper stretch or buying the lower stretch instead of always treating the first stretch touch as continuation. Fade-at-stretch means taking the opposite side at a stretch level instead of treating that level as a continuation breakout.

The tested procedure does not treat the pattern as a two-way opening-range setup and restricts the following session's studied breakout direction to the downside. The pattern is presented as an exception to the default assumption that the first move away from the open continues in that same direction.

When the procedure stands aside

One stated exception, from tests not shown on the supplied pages, is an upside gap after the bear-hook session that holds through mid-session after a move above the open. Editorial reading: that case is when the next-session procedure stands aside rather than taking the restricted downside breakout or a fade at stretch.

Illustrated next-session paths after bear-hook days include a tendency for the following open to sit at that day's high in the interest-rate futures example.

Editorial reading

TradersWeek editorial reading: the one-bar weak-open recovery is a permission change for the next session, not a new opening-range geometry. The stretch offsets stay in place. The archive then limits the studied breakout to the downside, allows a fade at stretch, and states an upside-gap exception after a move above the open that holds through mid-session. That synthesis is editorial and is not attributed to the archive.