The Strat Reversal Patterns: Inside, Outside, and Directional Bars
Summary
This indicator marks several price-action reversal setups built from relationships between consecutive bars. It classifies bars as inside, outside, directional up, directional down, two-up, or two-down, with a tolerance parameter to reduce sensitivity to small price differences. The patterns include two-one-two and three-one-two reversals, as well as two-two and two-three combinations. Labels distinguish upward and downward setups, and optional horizontal lines show relevant breakout levels.
An early-detection setting can flag some two-one-two and three-one-two patterns after an inside bar forms, before the confirming bar appears; these labels are provisional. With early detection off, the indicator waits for a bar meeting the reversal conditions. The document describes pattern definitions and plotting behavior, but gives no rules for position sizing, exits, market selection, or backtesting. It therefore explains how signals are identified, not whether they have predictive value or are profitable.
Key ideas
- An inside bar stays within the prior bar's high and low, while an outside bar exceeds both boundaries.
- Two-up and two-down bars are defined by making higher highs and higher lows, or lower lows and lower highs.
- The indicator identifies two-one-two, three-one-two, two-two, and two-three reversal sequences.
- Optional breakout lines mark price levels associated with the detected setups.
- Early detection can flag a setup before its confirming bar forms, so those signals are provisional.
- No performance testing or profitability evidence is provided.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.