Outside Day: Definition, Outside Reversal Day and What Followed 149 Outside Days

An outside day is a two-bar pattern: the second bar's high is above the first bar's high, and its low is below the first bar's low. The ChartSchool glossary defines it in exactly those terms. The range of the second day contains the whole range of the first; how the bars open and close plays no part in the definition. The same shape on any timeframe is also called an outside bar.

The chart marks every outside day on the daily S&P 500 ETF from August to November 2025, with a marker above the bar when it closed below the previous close and below the bar when it closed above.

Outside day, outside reversal day and engulfing candle

• Outside day: a higher high and a lower low than the previous bar. Nothing more.
• Outside reversal day: an outside day that closes in the opposite direction of the previous trend: down after an uptrend, up after a downtrend. The glossary presents it as a two-day pattern "that can indicate a reversal in trend".
• Engulfing candle: the second candle's body engulfs the first candle's body. The glossary notes the outside reversal is similar, "but requires the entire range (high and low) to be engulfed, not just the open and close". An engulfing candle can have a smaller range than the day before; an outside day cannot.

Two close relatives, the key reversal bar and the three outside up pattern, which waits for a third candle, are measured in the bench box below.

“Bullish and bearish outside days” in trading reports

Search for bullish and bearish outside days and you meet a second meaning. Edgeful, a provider of trading reports, writes in a post of November 23, 2024 that a bullish outside day occurs “when price opens above yesterday's high” and a bearish one when price opens below yesterday's low. That is a gap outside the previous range, the right-hand panel above, not the outside day of the ChartSchool glossary: the open is all that counts, and the session can stay inside yesterday's range for the rest of the day. The trade those reports study is the fade, a return to the previous high or low.

We counted that version on the same daily S&P 500 ETF, January 2021 to October 2026: 364 sessions opened above the previous high and 225 below the previous low. A session “traded back” when its low reached the previous high, or its high the previous low, before the close.

Most of those opens were filled back to the old range during the session, but only about a third closed back inside it. On daily Bitcoin the count is zero: the market trades around the clock, each daily bar opens at the previous close, and an open outside the previous range cannot happen. When you read a statistic on “outside days”, check which definition it uses before comparing it with another one.

A real case: October 10, 2025

One cent above the previous high is enough for the strict rule, and that is a weakness of any rule that compares highs and lows: a bar that barely exceeds the previous range counts as much as one that clears it by a wide margin. A single case also proves nothing either way, which is why we counted all of them.

Outside day reversal stats: the S&P 500 ETF, 2021 to 2026

We found every outside day on the daily S&P 500 ETF (dividend-adjusted prices) over 1,462 sessions, from January 4, 2021 to October 28, 2026, with the strict rule: a high above the previous high and a low below the previous low. The prior trend is the previous close compared with the close 10 sessions before it, and a down close is a close below the previous day's close. For each outside day we checked whether the close 5 sessions later, and 20 sessions later, was higher than the outside day's close. As a baseline, the same check over all sessions.

The 149 outside days are about one session in ten. Schaeffer's Research, in an article by Rocky White of May 7, 2025, counted 337 outside days on the S&P 500 index since 2010 and also found the returns after them unremarkable. The bearish outside reversal, the case the pattern is known for, did the opposite of a reversal on this ETF: 37 of the 51 were followed by a higher close a week later, against 59.6% for all sessions. The bullish outside reversal, on 22 cases, was followed by a higher close 5 sessions later in 11 of 22, less often than an average session. Neither reversal pointed the right way more often than a session picked at random. The table describes one rising market over six years; it does not say what an outside day will do next time.

On daily Bitcoin, the same rule found 67 outside days over 600 bars, from March 2025 to October 2026. Split four ways, that leaves 10 to 21 cases per line, too few to draw anything from; we do not publish the split.

How to trade an outside day

1. Start from the level, not the bar. Look for outside days at a resistance or support you had already marked, or at the edge of a pattern. The bar is the trigger, the level is the reason.
2. Read the close. A close against the prior trend is what turns an outside day into an outside reversal day, by the ChartSchool definition; a close in the middle of the range says the session was contested.
3. Wait for the next bar. A close beyond the outside day's close in the reversal direction is the same kind of confirmation that the three outside patterns wait for.
4. Stop beyond the extreme. For a short after a bearish outside reversal, the stop goes above the outside day's high; for a long, below its low. Outside days are wide by definition, so the stop is wide too: size the position on that distance.

Like the other bar patterns of technical analysis, outside days belong to the family of reversal candlestick patterns and to price action trading: both read the bars themselves rather than an indicator. Our bench measures the related candlestick patterns on several markets; the method is described in how we test patterns.