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.

  1. Bear

    An investor who believes that a particular security or market ...
  2. Trend

    The general direction of a market or of the price of an asset. ...
  3. Candlestick

    A chart that displays the high, low, opening and closing prices ...
  4. Resistance (Resistance Level)

    A chart point or range that caps an increase in the level of ...
  5. Reversal

    A change in the direction of a price trend. On a price chart, ...
  6. Technical Analysis

    A method of evaluating securities by analyzing statistics generated ...
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