Initial balance - weekly

Weekly Initial Balance (IB) — Indicator Description

The Weekly Initial Balance (IB) is the price range (High–Low) established during the week’s first trading session (most commonly Monday). You can measure it over the entire day or just the first X hours (e.g. 60 or 120 minutes). Once that session ends, the IB High and IB Low define the key levels where the initial weekly range formed.

Why Measure the Weekly IB?
Week-Opening Sentiment:
Monday’s range often sets the tone for the rest of the week. Trading above the IB High signals bullish control; trading below the IB Low signals bearish control.

Key Liquidity Zones:
Large institutions tend to place orders around these extremes, so you’ll frequently see tests, breakouts, or rejections at these levels.

Support & Resistance:
The IB High and IB Low become natural barriers. Price will often return to them, bounce off them, or break through them—ideal spots for entries and exits.

Volatility Forecast:
The width of the IB (High minus Low) indicates whether to expect a volatile week (wide IB) or a quieter one (narrow IB).

Significance of IB Levels
Breakout:
A clear break above the IB High (for longs) or below the IB Low (for shorts) can ignite a strong trending move.

Fade:
A rejection off the IB High/Low during low momentum (e.g. low volume or pin-bar formations) offers a high-probability reversal trade.

Mid-Point:
The 50% level of the IB range often “magnetizes” price back to it, providing entry points for continuation or reversal strategies.

Three Core Monday IB Strategies

A. Breakout (Open-Range Breakout)

Entry: Wait for 1–2 candles (e.g. 5-minute) to close above IB High (long) or below IB Low (short).

Stop-Loss: A few pips below IB High (long) or above IB Low (short).

Profit-Target: 2–3× your risk (Reward:Risk ≥ 2:1).

Best When: You spot a clear impulse—such as a strong pre-open volume spike or news-driven move.

B. Fade (Reversal at Extremes)

Entry: When price tests IB High but shows weakening momentum (shrinking volume, upper-wick candles), enter short; vice versa for IB Low and longs.

Stop-Loss: Just beyond the IB extreme you’re fading.

Profit-Target: Back toward the IB mid-point (50% level) or all the way to the opposite IB extreme.

Best When: Monday’s action is range-bound and lacks a clear directional trend.

C. Mid-Point Trading

Entry: When price returns to the 50% level of the IB range.

In an up-trend: buy if it bounces off mid-point back toward IB High.

In a down-trend: sell if it reverses off mid-point back toward IB Low.

Stop-Loss: Just below the nearest swing-low (for longs) or above the nearest swing-high (for shorts).

Profit-Target: To the corresponding IB extreme (High or Low).

Best When: You see a strong initial move away from the IB, followed by a pullback to the mid-point.

Usage Steps

Configure your session: Measure IB over your chosen Monday timeframe (whole day or first X hours).

Choose your strategy: Align Breakout, Fade, or Mid-Point entries with the current market context (trend vs. range).

Manage risk: Keep risk per trade ≤ 1% of account and maintain at least a 2:1 Reward:Risk ratio.

Backtest & forward-test: Verify performance over multiple Mondays and in a paper-trading environment before going live.