Outside Day, What's Next: Contraction, Not Continuation

An Inside Day (ID) is contraction. An Outside Day (OD) is one form the subsequent expansion can take. Across 7 futures markets and 14 FX pairs, the expansion is real, but the Outside Day (OD) remains the minority outcome. Since January 1, 2020, an Outside Day (OD) has occurred in about 9–13% of sessions. After an Inside Day (ID), that rises to 14–24%.

 

Outside Day, What's Next? Crabel Pattern Statistics across 7 futures markets and 14 FX pairs, from 2020 to date.  

After an IDnr4, the rate is usually a little higher, reaching about 30% on the Swedish Krona (USD/SEK). That is roughly twice the baseline rate. It is not a coin flip, and it is not a rule. 

 

On the E-mini S&P 500 (ES), 42 of 184 Inside Days (ID) were followed by an Outside Day (OD): 22.8%, against a baseline of 12.5%. The other 142 were not. For the E-mini S&P 500, an IDnr4 did not improve the rate: it remained 22.8%. But it did raise the rate for the Dow (YM), from 22.3% to 27.5%; Gold (GC), from 18.2% to 27.1%; and most major FX pairs.

 

S&P 500 E-mini Futures (daily bars): Outside Days (OD) and Inside Days (ID).

OD: A bar whose high is above the previous high and whose low is below the previous low, so the session takes out both sides of the prior bar. ID: A bar whose high is below the previous high and whose low is above the previous low, so the session sits inside the prior bar. 

Futures show a cleaner pattern than FX. The E-mini S&P 500 (ES), Nasdaq-100 (NQ), Dow (YM), Crude Oil (CL), and Natural Gas (NG) sit around 21–24% after an Inside Day (ID). The Euro (EUR/USD), Yen (USD/JPY), Forint (USD/HUF), and Rand (USD/ZAR) are closer to 14%. The pattern is the same, but the lift is smaller in FX pairs whose daily bars are defined by the New York session, even though the underlying market trades nearly around the clock.

 

 Nasdaq-100 (NQ), Oct 20, 2026: Outside Days (OD) and Inside Days (ID).

  

What That Means

An Inside Day (ID) tells that the session stayed within the prior day's range. That is balance, not direction. The next session must make the decision. Crabel's framework is that contraction precedes expansion. The trade is the breakout in the next session, not a bet that the next bar will be an Outside Day (OD).

 

An Outside Day (OD) is the loud version of expansion: price takes out both extremes of the prior bar. But expansion can take quieter forms—a break of only one side, a trend day that never reaches the opposite extreme, or a move beyond the range that subsequently returns inside. Those moves can still deliver the expansion the setup was designed to capture. Waiting for an Outside Day (OD) means passing up most of the trades the pattern is meant to produce.

 

IDnr4 is the tighter version of the setup: the bar is inside the prior bar and has the narrowest range of the past four sessions. Crabel preferred it to an Inside Day (ID) alone, an NR4 alone, or an opening-range breakout (ORB) taken indiscriminately every day. The data broadly support that preference. In the table above, the Outside Day (OD) rate after an IDnr4 is usually a little higher than after a plain Inside Day (ID). But even here, an Outside Day (OD) remains the minority outcome.

 

 Crude Oil (CL), Oct 21, 2026: Outside Days (OD) and Inside Days (ID).

What the Other Work Says

► Crabel trades the next session as a two-sided opening-range breakout (ORB) after an ID or IDnr4, unless the market is already running. In that case, he places the stop against the prevailing move and takes only the breakout in its direction. A wide-range day (WS) or an Outside Day (OD) means the expansion has already happened. It is not a fresh setup.

 

► Larry Williams treats the Inside Day (ID) as congestion and a potentially reliable short-term signal, but his published application is directional. In his course material, an Inside Day (ID) with a down close, when price was already below its level ten days earlier, was followed by a higher close the next day about 71% of the time in the S&P. That is a directional bias, not a breakout rule.

 

Williams' Outside Day Rule is a separate trade. An Outside Day (OD) that closes below the prior day's low is a buy; one that closes above the prior day's high is a sell. The logic is that the close signals rejection of the move beyond the prior extreme. Williams is fading the Outside Day (OD), not predicting that one will follow an Inside Day (ID) .

 

► Connors and Raschke took Crabel's IDnr4 setup and added explicit trade management. In Street Smarts, the rule is to place a buy stop one tick above the IDnr4 and a sell stop one tick below it for the next session only. If stopped out, reverse the position. If the trade is not profitable within two days, exit at the close.

 

Their central insight is useful: one can anticipate volatility expansion without knowing its direction. They also required a volatility filter—six-day historical volatility below half the 100-day reading—before taking the ID or NR4 setup (Street Smarts: The ID/NR4 Rules). The same idea appears in the popgun pattern, an Inside Day (ID) followed by an Outside Day (OD), and in the NR7-Inside hybrid. 

 

Later tests of a plain 30-minute opening-range breakout after an Inside Day (ID) have not consistently outperformed taking the breakout every day. Contraction narrows the opening range (ORB), but it does not, by itself, guarantee a better close-to-close result. 

 

What to Do After an ID or IDnr4

Do not enter on the bar that just printed. The pattern is yesterday's; the trade is in the next session. Prefer IDnr4 to a plain Inside Day (ID). The range is tighter, the contraction more pronounced, and in the Crabel Pattern Scanner sample the probability of a subsequent Outside Day (OD) is usually a little higher.

 

Use a two-sided breakout unless the intermediate trend is already running. If it is, take only the breakout in the trend's direction. A gap aligned with the run supports continuation; a break against it is the one to skip.

 

The entry is a break of the Inside Day's high or low, or a breakout from the Opening Range (OR) using Stretch—not a hope that the session will become an Outside Day (OD). If price breaks one side and holds, that is the trade. If it breaks both sides and closes back inside, the expansion has failed (Connors and Raschke's dual-stop version).

 

Expect an Outside Day (OD) roughly one session in four or five after an Inside Day (ID) in futures, and closer to one in six or seven in the quieter FX pairs. Size the trade for the more likely alternative. Most sessions will not engulf the prior range.

 

If the next session does produce an Outside Day (OD), the expansion has already occurred. Do not treat that bar as a fresh contraction setup. Williams would instead examine where it closed. A close below the prior low is his buy signal; a close above the prior high is his sell signal. That is a separate reversal trade, distinct from the breakout that followed the Inside Day (ID).

 

Stand aside when the Inside Day (ID) forms in choppy conditions with no established trend, or when the market opens beyond both sides of the range before you can execute the setup. The pattern is a contained session followed by a decision. If the market has already made that decision at the open, the setup is gone.

 

 British Pound (GBP/USD), Oct 20, 2026: Outside Days (OD) and Inside Days (ID).

See also:

Toby Crabel (1990) - Definition of Price Patterns.

 TPR (2026) - Trading Toby Crabel Patterns.

TPR (2026) - Inside Day, What's Next: Continuation, Reversal, or No Trade. 

TPR (2026) - Wide Spread 7, What's Next: Smaller Range, No Follow-Through. 

Larry Williams (1998) - Outside Bar Trading Setups.

Inside Day, What's Next: Continuation, Reversal, or No Trade

An Inside Day (ID) is contraction and has two main interpretations: continuation or reversal. The context determines which is more likely.

► Continuation: When the market is already running, the Inside Day (ID) is a pause within the prevailing move. Toby Crabel takes only the breakout in the trend's direction, placing the stop against the prevailing move. A breakout aligned with the run favors continuation; a break the other way is a skip. This is the more common case, accounting for about six Inside Days (ID) in ten.

► Reversal: When an Inside Day (ID) follows an Outside Day (OD), it marks a pause after expansion and may precede a turn. Larry Williams fades an Outside Day (OD) that closes beyond the prior bar's extreme: a close below the prior low is his buy signal; a close above the prior high is his sell signal. The Inside Day (ID) is then the contraction before a potential reversal, not a reason to chase the Outside Day (OD).

In either case, the signal sets up the next session's trade. The Inside Day (ID) itself is not the entry.

Inside Day, What's Next? Crabel Pattern Statistics across 7 futures markets and 14 FX pairs, from 2020 to date.

 

S&P 500 E-mini Futures (daily bars): Outside Days (OD) and Inside Days (ID).

OD: A bar whose high is above the previous high and whose low is below the previous low, so the session takes out both sides of the prior bar. ID: A bar whose high is below the previous high and whose low is above the previous low, so the session sits inside the prior bar. 

Do Not Wait for an Outside Day

An Outside Day (OD) follows an Inside Day (ID) roughly twice as often as its 9–13% baseline rate, but it remains the minority outcome. In futures, the rate is generally around 18–24%. After an IDnr4—a bar inside the prior bar with the narrowest range of the past four sessions—the probability often rises further.

 

Green cells in the table above — 25% or higher after an IDnr4:

● Dow (YM): 27.5%

● Gold (GC): 27.1%

● Natural Gas (NG): 26.5%

● British Pound (GBP/USD): 25.8%

● Australian Dollar (AUD/USD): 27.0%

● New Zealand Dollar (NZD/USD): 28.3%

● Swedish Krona (USD/SEK): 29.9%

 

Rose cells — 16% or lower after an IDnr4: 

● Euro (EUR/USD): 13.7%

● Yen (USD/JPY): 14.3%

● Forint (USD/HUF): 14.5%

● Rand (USD/ZAR): 13.9%

● Yen crosses

 Mini Dow ($5) (YM), Oct 20, 2026: Outside Days (OD) and Inside Days (ID).

The practical distinction is clear: favor the breakout when the IDnr4 signal is stronger, but do not wait for an Outside Day (OD) to engulf the prior range. That happens in only a minority of cases, even in the stronger markets. The breakout—not the Outside Day (OD) itself—is the trade.

 

Prefer an IDnr4 to a plain Inside Day  (ID) when the setup is otherwise valid. If the market is choppy, with no established trend and no preceding Outside Day  (OD) to frame a potential reversal, stand aside. The pattern is yesterday's; the trade is in the next session.

 

 Swedish Krona (USD/SEK), Oct 20, 2026: Outside Days (OD) and Inside Days (ID).

 

See also:

Toby Crabel (1990) - Definition of Price Patterns.

TPR (2026) - Trading Toby Crabel Patterns.

TPR (2026) - Outside Day, What's Next: Contraction, Not Continuation. 

TPR (2026) - Wide Spread 7, What's Next: Smaller Range, No Follow-Through.

Larry Williams (2026) - Small Ranges Beget Large Ranges.

Larry Williams (1995) - An Outside Look at Inside Days.

Toby Crabel (1990) - Inside Days in the S&P 500. 

Outside Bar Trading Setups | Larry Williams

In his book, 'Long-Term Secrets to Short-Term Trading', 2nd Edition, Chapter 7, Larry Williams provides price action patterns to profit. Larry Williams says that there are two daily bars that most confuse retail traders, the Inside Bar and the Outside Bar: 

» What the public 'sees' on their charts as being negative is most often apt to be positive for short-term market moves and vice versa. A case in point is an outside day with a down close. The day's high is greater than the previous day's high and the low is lower than the previous day's low and the close is below the previous day's low. This looks bad, like the sky is indeed falling in. In fact, the books I have read say this is an excellent sell signal, that such a wild swing is a sign of a market reversal in favor of the direction of the close, in this case down. 

 

[..] The problem is these outside day patterns do not occur as often as we would like! The next time you see an outside day with a down close lower than the previous day, don't get scared, get ready to buy ! « 

After an Outside Day with a Down Close lower than the previous day, BUY!
After an Outside Day with an Up Close higher than the previous day, SELL!

An Outside Bar is a bar that broke the previous bar's high and the previous bar's low. For related trading setups Larry Williams specifically looked for outside bars on the daily time frame that closed below the previous daily low or closed above the previous daily high. After such a bar prints, a reversal in the price action should be expected. According to Larry Williams, Outside Bars only appear 7% of the time on the daily time frame.

This is what an outside bar with a down close looks like:

According to Larry Williams, this will be a buy set up in theory. Here we can see it looks bearish to the public eye because the close is below the low. This indeed can be a turning point. Enter long on the next daily open. The stop loss is below the low of the outside bar.
 
This is what an outside bar with an up close looks like:

 

This is a sell set up. It looks bullish to the public eye because the close is above the high. This indeed can be a turning point. Enter short on the next daily open. The stop loss is above the high of the outside bar. 

 
Targets should be logically related to buy side/sell side liquidity levels (previous highs and lows), Imbalances/Fair Value Gaps and/or 50% swing retracement levels. Consider only setups offering risk-to-reward ratios ≥ 1:2.

 

Don't expect every single Outside Bar setup to be a winner. Other setups and filters can nullify or optimize it (e.g. Oops Pattern, Smash Day, Day of the Week, trading in Premium or Discount, actual outside bar small range or large range, swing high or swing low recently broken, occurrence in 3 Day Cycle and 3 Week Cycle, close above/below 9-Day EMA, etc.). The video below shows Outside Bar Trading Setups on timeframes also smaller than the daily.

Reference:
Larry Williams (1998) - Long-Term Secrets to Short-Term Trading, 2nd Edition.

D'onte Goodridge (February 2, 2023) - Outside Bar Model by Larry Williams. (video)

D'onte Goodridge (March 15, 2023) - Turning Points on the Higher Time Frame. (video)

Ali Casey (2022) - Larry Williams' Outside Day Strategy. (video)