Opening and midday ranges as an on-balance-volume breakout case

On-balance volume during consolidation

On-balance volume adds a period's full volume to a running total after an up close, subtracts that volume after a down close, and leaves the total unchanged when the close is unchanged.

The case presents on-balance volume as a way to observe accumulation or distribution during price consolidation and applies that reading to both intermediate-horizon stock study and same-session index-futures trading.

Rising, falling, and unresolved-volume-trend

A rising on-balance-volume trend is defined by successive higher peaks and higher troughs. A falling trend is defined by successive lower peaks and lower troughs. A sideways stretch without those sequences is treated as an unresolved-volume-trend.

The case treats a flip in the on-balance-volume peak-trough sequence as a breakout. That volume-ledger event is expected to precede a price breakout.

Opening-range test in the first session

In the first session example, the opening-range is the high and low of the first five minutes. The opening five-minute high held for the first 20 minutes while on-balance volume printed lower highs and lower lows, and a later up bar failed to break that opening high.

Editorial reading: that failed up bar is a volume-price-analysis nonconfirmation against a falling ledger, not a completed breakout. It stays on the watch list until the peak-trough sequence itself flips.

Opening-gap frequencies in the case

The case states that opening gaps are wholly or partly closed about 65 percent of the time, and that an opening gap higher is associated with a higher close about 65 percent of the time.

Editorial reading: those frequencies are background, not a substitute for a classified on-balance-volume sequence.

A rising sequence as the second-session condition

On the second session, after a gap higher, a rising on-balance-volume sequence with higher lows after 10:00 was used as the condition for a long breakout above 995.00.

Midday nonconfirmation without a trough break

During the second session's midday range, a negative divergence between price highs and on-balance-volume highs from about 11:00 to 12:30 was not treated as a reversal because the defining on-balance-volume trough was not broken.

After a new pullback low shortly after 1:00, the case records a resumed rising on-balance-volume trend and a long entry on a breakout above 1005.00.

Editorial reading: the midday divergence stayed on the watch list because the cumulative volume trend had not flipped.

A scheduled announcement can reverse the ledger

The case states that a scheduled interest-rate announcement near 2:15 can immediately reverse a previously established intraday on-balance-volume trend.

Editorial reading: keep an established peak-trough classification on the watch list through that announcement window, because the case says the ledger can reverse immediately.