What Is an Outside Day Reversal?

09/17/2015 9:00 am EST

Focus: FOREX

Eamonn Sheridan, of ForexLive.com, shares a question-and-answer between him and a subscriber about outside day reversal, specifically in regards to this currency pair.

Can anyone give a brief about outside day reversal. EUR/JPY managed to close off from the lows. Will this still be considered outside day? Thanks. (From kk)

Eamonn's Response:

kk is asking about the daily EUR/JPY

This is a close up...he is referring to the second last candle (the one I have the arrow pointing at):

Click to Enlarge

Here's what I look for for an outside day reversal.

The outside reversal candle has to have:

  • A higher high than the previous candle
  • And a lower low

The outside reversal candle will be more convincing if the close is below the previous candle's close.

By Eamonn Sheridan, Chief Asia-Pacific Currency Analyst, ForexLive.com

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