In layman’s terms or in simple English, let me explain what opening range breakout means.
If you break the phrase - Opening Range Breakout into the following:
Opening: Obviously it means starting of something, in this context it means the market
Range: Range is defined as the variation between the upper limit and lower limit, in this context, the limits of a stock price
Breakout: Breakout means moving outside of the specified limits or the range in this context.
Any stock creates a range in the first 30 minutes of trading in a day. This is calling Opening Range. The highs and lows of this time frame are taken as support and resistance.Any stock should trade within a range, which is comparatively lesser than the average daily range of the stock. The upper and lower boundaries of the range can be identified by the high and low of the first 30 - 60 minutes.
You can buy when the stock moves above the opening range high and sell when the stock moves below the opening range low. The idea is to go long on a break above resistance, or short on a break below support.
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