IBOBAlgo

INSIDE/OUTSIDE BAR STRATEGY

Quick Facts:

• Category: Candlestick Patterns / Breakout
• Markets: All liquid markets
• Timeframes: 15min, 1H, 4H, Daily

Overview

The IBOB Algorithm identifies two powerful candlestick patterns: Inside Bars (compression) and Outside Bars (expansion). These patterns represent fundamentally different market states and require different trading approaches.

Inside Bars signal consolidation and pending breakouts. Outside Bars signal volatility expansion and momentum. The algorithm trades both patterns with pattern-specific entry and exit logic.

How It Works

INSIDE BAR DETECTION An inside bar is completely contained within the previous bar:

• High < High[1] AND Low > Low[1]
  • Signals market indecision and compression
  • Trade the breakout of the "mother bar" range

OUTSIDE BAR DETECTION An outside bar completely engulfs the previous bar:

• High > High[1] AND Low < Low[1]
  • Signals volatility expansion and control change
  • Direction determined by close position

ENTRY LOGIC Inside Bar:

• Wait for breakout of mother bar high/low
  • Direction determined by breakout direction

Outside Bar:

• Enter immediately based on close direction
  • Bullish: Close in upper half of range
  • Bearish: Close in lower half of range

MULTI-BAR PATTERNS Track consecutive inside bars for tighter compression:

• 2-3 consecutive inside bars = extreme compression
  • Larger expected move on breakout

Key Parameters

PATTERN SELECTION:

• tradeInsideBars (true): Enable inside bar trading
  • tradeOutsideBars (true): Enable outside bar trading
  • minMotherBarATR (0.8): Minimum mother bar size

INSIDE BAR BREAKOUT:

• breakoutBuffer (0.1): ATR multiple for breakout confirmation
  • maxBarsForBreakout (5): Expiration for inside bar setups

OUTSIDE BAR:

• closePositionPct (50): Close must be in this % of range for direction
  • minOutsideBarATR (1.5): Minimum outside bar size

Best Use Cases

✅ DAILY INSIDE BARS for swing trade setups ✅ INTRADAY COMPRESSION before session opens ✅ OUTSIDE BARS for momentum continuation ✅ VOLATILITY REGIME detection