Outside Reversal

DEFINITION of 'Outside Reversal'

A price chart pattern in which a security's high and low prices for the day exceed those of the previous trading session. The outside reversal pattern is called by candlestick chartists and analysts a "bearish engulfing" pattern if the second bar is a down candlestick, and a "bullish engulfing" pattern if the second bar is an up candlestick.

BREAKING DOWN 'Outside Reversal'

An outside reversal is a price pattern used by technical analysts to help identify potential bearish or bullish price movement in a particular market. It occurs where a price bar falls "outside" of the previous price bar, where its high is greater than the previous bar's high and where its low is lower than the previous bar's low. In general, if the outside reversal occurs at a resistance level, it is viewed as a bearish signal; if it occurs at the support level, it is viewed as a bullish signal.

RELATED TERMS
  1. Hook Reversal

    A short-term candlestick pattern, occurring in either an uptrend ...
  2. Bearish Abandoned Baby

    A type of candlestick pattern that is used by traders to signal ...
  3. Bullish Engulfing Pattern

    A chart pattern that forms when a small black candlestick is ...
  4. Bearish Engulfing Pattern

    A chart pattern that consists of a small white candlestick with ...
  5. Upside Tasuki Gap

    A candlestick formation that is commonly used to signal the continuation ...
  6. Outside Days

    A term employed by market technicians and day traders. Outside ...
Related Articles
  1. Charts & Patterns

    The 5 Most Powerful Candlestick Patterns (NUAN, GMCR)

    Statistics show unusual accuracy for the buy and sell signals of certain candlestick patterns like abandoned baby, evening star, and three black crows.
  2. Chart Advisor

    Two Candlestick Patterns Predicting A Top

    We find some tops in two stocks using a couple of different candlestick patterns.
  3. Chart Advisor

    Bearish Engulfing Patterns Threaten These Stocks

    Bearish engulfing patterns show that sellers are present, and momentum has shifted to the downside compared to the prior day. The pattern is fairly common though, so it is best to combine with ...
  4. Charts & Patterns

    Advanced Candlestick Patterns

    Go beyond the basics! Learn to identify and trade island reversals, kicker patterns and more.
  5. Stock Analysis

    Candlestick Charts: Quickly Spot Patterns With This Popular Charting Style

    Candlestick charts were first used by rice traders in Japanese futures markets in the 1700s. They were introduced to traders outside of Japan in 1991, when "Japanese Candlestick Charting Techniques" ...
  6. Active Trading

    Range Bar Charts: A Different View Of The Markets

    While range bars are not a type of technical indicator, traders can employ this useful tool to identify trends and interpret volatility.
  7. Chart Advisor

    Bullish Engulfing Reversals: Turn-around Plays

    On April 2 the S&P 500 created a bullish engulfing pattern, recouping the loss from the April 1 session. Therefore, it seemed relevant to look at some bullish engulfing reversal patterns. ...
  8. Entrepreneurship

    Economics of Owning a Bar

    Understand what costs go into starting and running a bar, as well as what earnings can be expected. Learn whether or not it is smart to own a bar.
  9. Chart Advisor

    4 Companies With Positive Technical Buy Signals

    For these upward trending stocks, a bullish engulfing pattern could mark the end of the pullback and the start of another move higher.
  10. Trading Strategies

    Technical Analysis: Chart Patterns

    By Cory Janssen, Chad Langager and Casey MurphyA chart pattern is a distinct formation on a stock chart that creates a trading signal, or a sign of future price movements. Chartists use these ...
RELATED FAQS
  1. What are common strategies traders implement when identifying a Bearish Engulfing ...

    Learn how to spot a bearish engulfing pattern, and learn some of the trading strategies you can implement to take advantage ... Read Answer >>
  2. How are Outside Days interpreted by analysts and traders?

    Understand the meaning and significance of outside days and how they are interpreted as trading signals by traders and market ... Read Answer >>
  3. How are Piercing patterns interpreted by analysts and traders?

    Understand the candlestick piercing pattern and the common interpretation of market reversal assigned by traders and market ... Read Answer >>
  4. Are continuation patterns most useful when looking at Candlesticks?

    Learn the basics of using candlesticks to confirm continuation or reversal patterns and the vital role this plays in establishing ... Read Answer >>
  5. How do I implement a forex strategy when spotting a Star Pattern?

    Learn a simple forex trading strategy designed to take advantage of market reversal indications given by three star candlestick ... Read Answer >>
  6. What do the different colored candlesticks mean?

    Candlestick charts have been used in Western trading for many years and are a very popular method of plotting the price action ... Read Answer >>
Hot Definitions
  1. Demand Curve

    The demand curve is a graphical representation of the relationship between the price of a good or service and the quantity ...
  2. Goldilocks Economy

    An economy that is not so hot that it causes inflation, and not so cold that it causes a recession. This term is used to ...
  3. White Squire

    Very similar to a "white knight", but instead of purchasing a majority interest, the squire purchases a lesser interest in ...
  4. MACD Technical Indicator

    Moving Average Convergence Divergence (or MACD) is a trend-following momentum indicator that shows the relationship between ...
  5. Over-The-Counter - OTC

    Over-The-Counter (or OTC) is a security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, ...
  6. Quarter - Q1, Q2, Q3, Q4

    A three-month period on a financial calendar that acts as a basis for the reporting of earnings and the paying of dividends.
Trading Center