Botty · Outside-Inside Breakout

Outside-Inside Day (Raschke 3-Bar Pattern)

3-bar setup by Linda Raschke: outside bar → inside bar → break above/below the inside-bar range. Compressed energy discharges in the trend direction.

Core idea

Developed by Linda Bradford Raschke (Street Smarts, 1995). The pattern exploits the natural volatility compression that follows a swing breakout.

The 3 bars

Bar -3 (reference): Normal bar — defines the reference range
Bar -2 (outside):   High > reference high  AND  Low < reference low
                    = A bar that completely engulfs the previous one.
                    Shows indecision despite volatility.
Bar -1 (inside):    High < outside high   AND  Low > outside low
                    = Compression. The market is holding its breath.
Bar  0 (trigger):   Close > inside high   → LONG
                    Close < inside low    → SHORT

Why it works

The outside bar absorbs both sides (buyers and sellers fighting).
The inside bar shows exhaustion of the fight — neither side can prevail.
The breakout reveals which side won — with a relative element of surprise (stop orders above/below the inside range get taken out).

The pattern is especially reliable after a clear trending phase, because it captures a "pause before continuation".

Botty implementation

strategies/conditions.py → entry condition outside_inside_day. The signal is only checked on candle close (signal_on_close: true). No parameters of its own — the pattern is entirely structure-based.

is_outside = h_out > h_ref and l_out < l_ref
is_inside  = h_in  < h_out and l_in  > l_out
if c_now > h_in: return LONG
if c_now < l_in: return SHORT

Tips

Best results in the context of a higher-timeframe trend (e.g. add an EMA-200 filter).
Stop typically placed below/above the outside bar or inside bar.
Caution in strongly trending markets without a pause: the pattern can be "too early".