What Is an Outside Reversal?
An outside reversal occurs when the market opens outside the previous day’s range, either above the prior high or below the prior low. This strategy analyzes what typically happens next: does price reverse back into yesterday’s range, or does it continue moving away?
Outside reversals do not occur every day, which is why they are most useful when identified in pre-market or right at the open.
Bullish Outside Reversal: today opens above yesterday’s high
Bearish Outside Reversal: today opens below yesterday’s low
The Outside Reversal measures how often price reverses to touch the prior day’s boundary (yesterday’s high on bullish outside opens, yesterday’s low on bearish outside opens) versus how often price does not reverse and instead continues in the direction of the open.
Only sessions where the market opens above the prior high or below the prior low are included. The goal is to frame expectations once an outside open is present.
How Do I Use This?
Use the reversal and non-reversal rates to establish a directional bias and avoid forcing the wrong trade idea early in the session:
When reversals dominate, prioritize setups that assume price is likely to rotate back to the prior day’s boundary.
When non-reversals are more common, be more selective about fading the move and instead look for continuation behavior.
Based on the sample statistics:
Bullish Outside Reversal: price reverses to touch yesterday’s high 84% of the time; it does not reverse 16% of the time.
Bearish Outside Reversal: price reverses to touch yesterday’s low 62% of the time; it does not reverse 38% of the time.
Outside opens are important because they immediately raise a key question for the session:
Does the market accept this higher or lower open, or does it reject it and rotate back into yesterday’s range?
This report answers that question using historical probabilities so you can align your trade plan accordingly.
Example: Bullish Outside Open
Yesterday’s high: $100
Yesterday’s low: $95
Today’s open (9:30 ET): $101
Because price opens above yesterday’s high, this is a bullish outside open.
Size Subreport
What does this measure?
This subreport evaluates the same outside-day conditions:
Bullish Outside Day: today opens above yesterday’s high
Bearish Outside Day: today opens below yesterday’s low
It then groups those sessions by outside-day size, defined as the percentage distance between:
yesterday’s high and today’s open (bullish outside days), or
yesterday’s low and today’s open (bearish outside days)
The purpose is to compare reversal behavior across different outside-open magnitudes. Smaller outside opens tend to rotate back into the prior day’s range more frequently, while larger outside opens are more likely to continue.
0 - 0.25%, 0.26 - 0.5%, 0.51 - 0.75%, 0.76 - 1.0%, 1.01 - 1.5%, >1.51%
How can I use this?
Use the size buckets to assess whether today’s outside open is more likely to behave as a fade/reversion setup or a continuation setup, based on how far price has opened outside yesterday’s range.
Based on the sample statistics shown for the selected size bucket:
Bullish Outside Day: reverses to touch yesterday’s high 100% of the time; does not reverse 0%
Bearish Outside Day: reverses to touch yesterday’s low 83% of the time; does not reverse 17%
Outside opens are not all equal. A small push beyond yesterday’s range can behave very differently than a large displacement open. The Size subreport helps isolate the highest-probability scenarios rather than relying on a single average across all outside days.
Example
Previous session high: $1,000
Today’s open: $1,005
Outside-day size: 0.5% (price opened 0.5% above the prior high)
Weekday Subreport
What does this measure?
This subreport tracks the same outside-day conditions:
Bullish Outside Day: today opens above yesterday’s high
Bearish Outside Day: today opens below yesterday’s low
Results are segmented by day of the week (Monday–Friday) to show how reversal versus continuation tendencies vary depending on when the outside open occurs.
How can I use this?
Use weekday tendencies to refine expectations and avoid overgeneralizing outside opens:
If a specific weekday shows higher reversal rates, prioritize plans that assume a rotation back toward the prior day’s boundary.
If a weekday shows higher non-reversal rates, be more cautious fading the move and place more weight on continuation behavior.
Based on the sample statistics shown for the selected weekday:
Bullish Outside Day: reverses 50% of the time; does not reverse 50%
Bearish Outside Day: reverses 50% of the time; does not reverse 50%
Market behavior can vary by weekday due to positioning, liquidity patterns, and scheduled catalysts. The Weekday subreport adds time-based context, helping you determine whether an outside open is more likely to revert or hold.
Example
Yesterday’s high: $200
Yesterday’s low: $190
Today (Wednesday) opens at: $189 → bearish outside day
A reversal outcome would be price returning to touch $190 during the session.
A non-reversal outcome would be price never touching $190 and continuing lower.