The Opening Range Breakout (ORB) strategy begins with price levels from the market open. VWAP, volume, and moving averages can be tested as additional filters, but each one changes the rules and does not guarantee better results.
This post explains three commonly used indicators and how to define them clearly enough for historical testing.
1. Volume Weighted Average Price (VWAP)
VWAP is arguably the most important indicator for intraday traders. It represents the average price a security has traded at throughout the day, based on both volume and price.
Why it works with ORB
Institutional algorithms often use VWAP to execute large block trades. When a stock is trading above VWAP, the intraday trend is considered bullish. When it’s below VWAP, the trend is bearish.
How to use it:
- The VWAP Bounce: One testable condition requires price to break the Opening Range High (ORH) while above VWAP, then checks whether the level holds on a retest.
- The VWAP Rejection: Avoid taking a long ORB trade if the price is breaking out right into the VWAP line from below, as VWAP often acts as heavy dynamic resistance.
2. Relative Volume (RVOL)
Volume is the fuel that drives breakouts. A breakout without volume is highly likely to reverse, trapping early buyers.
Why it works with ORB
The ORB strategy depends on a sudden influx of market participants pushing the price out of equilibrium. Relative Volume compares the current volume to the average volume for that specific time of day.
How to use it:
- Confirmation: Only take an ORB trade if the breakout candle has an RVOL of at least 1.5x (150%) compared to the average morning volume.
- Fakeout Filter: If a 5-minute candle closes above the ORH but the volume is significantly lower than the previous candles, skip the trade. It’s likely a false breakout.
3. 9 EMA (Exponential Moving Average)
While VWAP shows the average institutional price, the 9 EMA on a 5-minute chart provides a tight, dynamic trendline that reacts quickly to short-term momentum shifts.
Why it works with ORB
The 9 EMA acts as a “trailing support” for strong momentum trades. Once a stock breaks out of its opening range, it will often “ride” the 9 EMA upward (or downward).
How to use it:
- Entry Confluence: The best ORB setups occur when the 9 EMA crosses the Opening Range boundary right as the price breaks out, acting as a springboard.
- Trailing Stop: Instead of a fixed profit target, some traders use the 9 EMA as a trailing stop. They hold the trade as long as the 5-minute candle closes above the 9 EMA, maximizing gains on trend days.
Conclusion
While you don’t want to clutter your chart with dozens of indicators, combining the ORB strategy with VWAP, Volume, and the 9 EMA provides the perfect balance of price action and technical confirmation.
By waiting for these indicators to align before entering a trade, you’ll naturally avoid choppy markets and drastically reduce your false breakouts.
Ready to practice? Check out our interactive ORB simulator to test these indicator combinations in real-time!