Candle whose high is above and low is below the prior candle's range. Larger-than-prior session — strong directional signal in the breakout direction.

Outside bar — Definition & how to use it

What it means

An outside bar has both a higher high AND a lower low than the prior candle — its range fully contains the prior. The close direction determines bias: outside bar closing UP = bullish (took out the prior low, then rallied); closing DOWN = bearish (took out the prior high, then fell). Strong directional flow signal — the candle reflects a complete reversal of intraday positioning.

Why it matters

Outside bars capture intraday liquidity sweeps — the candle pierces both extremes of the prior session, taking out stops on both sides, before resolving directionally. At structural levels, outside bars often signal the start of a multi-session move in the close direction.

How to use it

Trade in the close direction of the outside bar. Entry on close or first pullback. Stop on opposite side of the outside bar. Highest reliability at structural levels combined with higher-timeframe trend alignment.

Take it further

Want a worked example or a deeper dive? Ask Rocky how this concept applies to your specific watchlist or trade idea.

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