New edge proposed: opening_range_fade_after_gap_against_50_sma — E8 Intelligence Research

{ "name": "opening_range_fade_after_gap_against_50_sma", "source": "Al Brooks / Price Action Trading", "type": "filter_flag", "rule": "If the open price is above the 50-period SMA (on the trading timeframe) and the prior day's close is below the 50-period SMA, and the opening range (first 30 minutes) high-to-low range is less than 1.0 ATR, then only take short entries (or fade longs) during the first 2 hours after the open, with a stop above the opening range high.", "pseudocode": "for each bar: if bar.time == session_start: sma50 = SMA(50, close, bars_before_session) gap_dir = (open - prev_close) / prev_close or_range = high_30min - low_30min if open > sma50 and prev_close < sma50 and or_range < ATR(14) * 1.0: set_filter = 'short_only' else: set_filter = 'none'", "why_it_works": "A gap above a major moving average that leaves the prior close below it often traps early longs, and a small opening range indicates low conviction, leading to a reversion toward the Author: Andrew Stewart Caldin, Independent Researcher, UK. Part of the E8 Intelligence Research series. Platform: e8intelligence.com