The 8 Possible Range Patterns in Any Chart | Larry Williams

In any chart, there are only eight possible range patterns, and each bar can produce only four possible outcomes relative to the preceding bar:

(1.) Down Range: The current bar's high is lower than the previous bar's high, and its low is lower than the previous bar's low.
(2.) Up Range: The current bar's high is higher than the previous bar's high, and its low is higher than the previous bar's low.
(3.) Inside Range: The current bar's high is lower than the previous bar's high, and its low is higher than the previous bar's low. On a daily S&P 500 chart, this occurs approximately 12% of the time.
(4.) Outside Range: The current bar's high is higher than the previous bar's high, and its low is lower than the previous bar's low. On a daily S&P 500 chart, this also occurs approximately 12% of the time.

Each bar can produce only one of four possible outcomes: an up range, a down range, an inside range, or an outside range.

 

Price action cannot produce any other range configuration. Each of these four range patterns can, in turn, form either an up bar or a down bar, giving us eight possible range patterns:

(1.) Down Range, Down Day
(2.) Down Range, Up Day
(3.) Up Range, Down Day
(4.) Up Range, Up Day
(5.) Inside Range, Down Day
(6.) Inside Range, Up Day
(7.) Outside Range, Down Day
(8.) Outside Range, Up Day

These eight patterns can serve as the basis for some powerful trading strategies. Larry Williams presented back-tested statistics for trading them using a simple entry-and-exit methodology. He emphasized that these were not necessarily the best entry or exit techniques; he chose them because they were straightforward to understand and program. The objective was simply to identify where a directional bias or statistical advantage might exist in the market.

Entry: At the market close.
Stop Loss: Based on a fixed dollar amount.
Exit: At the first profitable opening.

Williams's message was that traders could go home and verify the results using their own software. His back-test of the E-mini S&P 500 futures, covering 2002 through 2015, produced the following results:

The Down Range, Down Close pattern (No. 1) offered the greatest net-profit potential as a short-term long setup. This was the central takeaway from the presentation.

Williams then examined the Down Range, Down Close setup in greater detail to determine which day of the week offered the best trading opportunities. The statistics supported the "Turnaround Tuesday" concept.

Further analysis by trading day of the month identified the 1st, 17th, 19th, 22nd, and 23rd as the most favorable dates, producing 92% winning trades and $47,500 in net profits across 107 trades.

He also found that a Down Range with a larger-than-average range outperformed one with a smaller range:

Larger Range: $205 average profit, 80% winners.
Smaller Range: $33 average profit, 85% winners.

Another distinction was whether the close was naked or covered. A naked close means that the bar closes outside the previous day's range. A covered close remains within the previous day's range. The results favored the naked close:

Naked Close: $155 average profit, 83% winners.
Covered Close: $30 average profit, 83% winners.

Finally, combining range size and close location produced the following results:

Down Range, Larger Range, Covered Close: $60 average profit, 83% winners.
Down Range, Larger Range, Naked Close: $215 average profit, 85% winners.

 

Reference:

Larry Williams (2014) - Las Vegas Traders Expo Presentation.

Larry Williams (2015) - Presentation in Moscow.

 

See also:

 Larry Williams (2025) - How Markets Move: The Natural Cycle of Range Change.

TPR (2026) - Trading Toby Crabel Patterns.