22 / 50
Breakout
Which bar's range does an inside bar breakout break?
Inside bar breakout
What it bets
A whole bar's high and low sit inside the prior bar, and breaking that inside bar picks a direction.
How the rule is written
The current high is below the prior high, and the current low is above the prior low. After that, a break of the inside bar's high is long, and a break of its low is short. Some versions also require a break of the outside mother bar. The rule has to name which price it uses.
When it fails
Inside bars are very common in a chop. A break of one side that immediately hits the other side loses on both.
Do not confuse it with
NR7 compares range and asks whether it is the smallest of 7 bars. The high and the low do not both have to sit inside the prior bar. An inside bar is compared only with the bar before it.