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Initial balance

The high and low established in the first hour of a session, used as the reference range for judging the rest of the day.

The first hour, traditionally the first two half-hour TPO brackets, sets the day's opening boundaries. A session that stays inside it is balanced; one that extends beyond it is said to show range extension.

The useful classification comes from how much extension occurs. A wide initial balance with little extension suggests a rotational day where fading the edges is viable; a narrow one broken early suggests a trend day where fading is dangerous.

The one-hour convention is a convention, not a law, and it derives from pit-session structure. In markets that trade around the clock, defining when the session starts is an arbitrary choice that changes every conclusion drawn from it.

Related: market-profile, opening-range, balance-area, prior-day-high-low, session-breaks

See it drawn

Original diagrams for the ideas on this page. Illustrative, not real market data.

A range beside a trendOne chart swinging between a flat floor and ceiling, another stepping upwards inside a pair of sloping lines.Range-boundresistancesupportprice bounces between two levelsTrendingthe trend channelhigher highs and higher lowsA range has two flat edges; a trend has two sloping ones.
Range versus trend. On the left price keeps bouncing between the same floor and ceiling, which is a range. On the right each high and each low is higher than the last, inside a pair of sloping lines called a channel.

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