12# Balance Breakout Strategy -TradingView-

Dimitri 2025

The Balance (IB) represents the first trading range of a session — usually the price action that occurs within the first hour after the market opens (for example, 08:30–09:30).
This period often sets the tone for the day, establishing the key high and low boundaries that define potential breakout levels.

The Balance Breakout Strategy identifies these ranges automatically and plots visual markers for:

The IB High and Low,

Fibonacci retracement levels inside the range,

Extension zones above and below the range,

Forecasted breakout targets, calculated statistically from historical data.

How It Works

Identify the Initial Balance (IB)
- The indicator automatically detects the session’s first-hour range.
  
  The top line marks the highest price of the IB.
  
  The bottom line marks the lowest price of the IB.
  
  A shaded box highlights this zone on the chart.
Forecast and Extensions
- Once the IB is complete, the script plots forecast levels above and below the range, using past IB movements.
  
  Optional extensions (50% or custom values) project potential continuation zones beyond the IB.
  
  Fibonacci levels (23.6%, 38.2%, 50%, 61.8%, 78.6%) are also drawn to show retracement or breakout thresholds.
Breakout Detection
- When price closes above the IB high, a bullish breakout signal (triangle up) appears.
  
  When price closes below the IB low, a bearish breakout signal (triangle down) appears.
  
  These signals are displayed only after the Initial Balance period ends.
Forecasting Logic
- The indicator can project the next IB range using two modes:
  - IB Against Previous Open: Calculates the average distance between previous IB highs/lows and the previous day’s IB open.
    
    Filter by Current Day of Week: Uses data from the same weekday to forecast typical IB range movement.
  The Forecast Multiplier lets traders expand or tighten this projection.

Trading Rules

Condition	Signal	Action
Price closes above IB High	🔼 Bullish Breakout	Consider long positions
Price closes below IB Low	🔽 Bearish Breakout	Consider short positions
Candle remains inside IB range	⚪ Neutral	Wait for breakout confirmation
Forecast zone reached	🎯 Target	Partial or full take profit

Stop-Loss:

For long trades → below IB Low

For short trades → above IB High

Take-Profit:

Based on the projected forecast level or extension percentage

A common ratio is 1:2 or 1:3 risk-reward

Strategy Insights

Morning range matters: The first 60 minutes often define institutional positioning.

Breakouts with volume or strong momentum are more reliable.

False breakouts often occur near Fibonacci retracement levels — use them as warning zones.

Combine with a higher-timeframe trend filter (e.g., 50 EMA) to trade in the direction of the broader move.

Customization Options

Auto Session Detection: Adjusts automatically based on market hours.

Display Modes: Toggle between showing only the last IB or all historical ones.

Fibonacci & Extensions: Turn on/off or customize each level.

Forecast Settings: Choose memory length, multiplier, and day-based filters.

Example Application

Wait for the IB period to complete (e.g., 09:30).
Observe the IB range and any forecasted extensions.
Enter when price breaks and closes beyond the IB boundaries.
Use forecast levels as take-profit targets, managing risk below/above the IB.

This approach captures post-open volatility, when institutional activity defines daily direction.

Conclusion

The Initial Balance Breakout Strategy by LuxAlgo offers a structured, data-driven approach to breakout trading.
It combines market session logic, Fibonacci precision, and historical forecasting to help traders identify high-probability continuation moves after the morning range.