An Outside Reversal is a price pattern that indicates a potential change in trend on a price chart. It is observed when the security’s high and low prices for the day exceed those of the previous day’s trading session. This two-day pattern can also be referred to as either a bullish engulfing (after an downward price move) or bearish engulfing (after an upward price move) when observed on candlestick charts.The outside reversal generally signals that there may be some underlying strength in the market, as buyers are willing to pay more than they did previously, leading to higher highs and lows compared with yesterday's close. The formation of this type of pattern usually shows investors have become more confident about buying into stocks after seeing them fall or rise significantly over one period before reversing direction again shortly afterwards – which could indicate upcoming volatility ahead for traders looking at these securities intraday or longer term investments alike.When it comes time to analyze such patterns, technical analysts often look at volume levels alongside other indicators like relative strength index (RSI), moving averages, etc., while fundamental analysts will take into account company fundamentals like earnings reports and financial statements too help gauge whether their investment strategies should include taking positions based off these reversals seen on their charts. Ultimately though it all depends what kind investor you are; short-term traders tend favor shorter duration trades whereas long-term value investors prefer holding onto stocks over extended periods time if they see good prospects from data analysis point view - so being able make informed decisions quickly key success any kind stock market activity!
