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. Bullish Abandoned Baby

    A type of candlestick pattern that is used by traders to signal ...
  3. Bearish Abandoned Baby

    A type of candlestick pattern that is used by traders to signal ...
  4. Bar Chart

    A style of chart used by some technical analysts, on which, as ...
  5. Sushi Roll

    A candlestick pattern consisting of 10 bars where the first five ...
  6. Bullish Engulfing Pattern

    A chart pattern that forms when a small black candlestick is ...
Related Articles
  1. Markets

    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. Trading

    Using Bullish Candlestick Patterns To Buy Stocks

    These five popular candlestick chart patterns signal a bullish reversal in downtrend.
  3. Trading

    Advanced Candlestick Patterns

    Go beyond the basics! Learn to identify and trade island reversals, kicker patterns and more.
  4. 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.
  5. Markets

    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.
  6. Trading

    Star Formations Spotlight Luminary Trades

    Morning, evening and doji stars will have you basking in better trading profits.
  7. Trading

    Gauging Entry And Exit Signals With Range Bars

    Wide range price bars often generate important signals that traders can use for timely entry or exit.
  8. Trading

    Candlestick Charting: Perfecting The Art

    Take a look at continuation patterns and how they can confirm or deny trends.
  9. Trading

    Candlestick Charting: What Is It?

    Discover the components and basic patterns of this ancient technical analysis technique.
  10. Trading

    Candlesticks And Oscillators For Successful Swing Trades

    Take advantage of short-term price moves by pinpointing reversals.
RELATED FAQS
  1. What are the differences between a bar chart and candle sticks?

    Explore the difference between bar and candlestick charts. Learn how technical analysts use charts in the analysis of supply ... Read Answer >>
  2. 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 >>
  3. 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 >>
  4. 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 >>
  5. What are the most common Bullish patterns used by traders?

    Learn about some of the most commonly recognized bullish candlestick chart patterns that traders use to identify market turning ... Read Answer >>
  6. How do I build a profitable strategy when spotting a Star pattern?

    Learn how to implement a profitable trading strategy based on the occurrence of either the morning or evening star candlestick ... Read Answer >>
Hot Definitions
  1. AAA

    The highest possible rating assigned to the bonds of an issuer by credit rating agencies. An issuer that is rated AAA has ...
  2. GBP

    The abbreviation for the British pound sterling, the official currency of the United Kingdom, the British Overseas Territories ...
  3. Diversification

    A risk management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique ...
  4. European Union - EU

    A group of European countries that participates in the world economy as one economic unit and operates under one official ...
  5. Sell-Off

    The rapid selling of securities, such as stocks, bonds and commodities. The increase in supply leads to a decline in the ...
  6. Brazil, Russia, India And China - BRIC

    An acronym for the economies of Brazil, Russia, India and China combined. It has been speculated that by 2050 these four ...
Trading Center