Outside Bar

An outside bar forms when one candle breaks both the high and the low of the prior candle. It shows expansion beyond the previous range.

At A Glance

• Name: Outside Bar
• Category: Momentum And Continuation Candles
• Type: Expansion
• Number of candles: 2 candles
• Typical context: After compression, around levels, or during volatility expansion.

How To Identify It

• Body: The second candle often has a larger body or range than the first.
• Wicks: The second candle's high and low extend outside the prior candle range.
• Relationship: The second candle fully expands beyond the prior candle high-low range.

Compare the second candle to the prior candle. The outside bar must trade above the prior high and below the prior low, making a wider range than the mother candle.

Context

Outside bars are most useful to study when they appear after tight action or near an important level.

Outside bars matter most near levels, after compression, or during expansion because they show price leaving the prior candle range on both sides. The close helps decide which side ended with more control.

What It Shows

An outside bar shows range expansion. Both sides of the prior candle were tested, and the close tells you whether buyers or sellers finished with the stronger response.

What To Watch Next

Watch which side of the outside bar range price respects next. Holding above or below that wide range gives a cleaner read than the outside bar alone.

The read weakens if price remains trapped inside the outside bar range. That means the expansion did not lead to clean direction.

Common Confusion

An engulfing candle focuses on the body covering the prior body. An outside bar focuses on high-low range expansion.

Key Takeaway

An outside bar shows expansion beyond the prior candle range. The close and the next hold decide whether that expansion has direction.

Related Lessons

• High-Volume Red Candle
• Gap Up
• Momentum And Continuation Candles
• Candlestick Basics