---
title: "Inside-Outside-Inside (I-O-I)"
canonical: https://thestrat.ai/docs/inside-outside-inside/
updated: 2026-09-24
author: Alex Sopa (AlexsOptions)
source: TheStrat docs (https://thestrat.ai/docs/)
---

Tools for AI agents: https://mcp.thestrat.ai — see https://thestrat.ai/agents/

# Inside-Outside-Inside (I-O-I)

By [Alex Sopa (AlexsOptions)](https://thestrat.ai/docs/alex-sopa/) · Updated September 24, 2026

**Definition** Inside-Outside-Inside (I-O-I) is the sequence [inside bar](https://thestrat.ai/docs/inside-bar/) → outside bar → inside bar: contraction → expansion → contraction. The next move should be expansion. The second inside bar is the [actionable signal](https://thestrat.ai/docs/actionable-signals/); its break targets at least the far side of the outside bar.

The outside bar tells you a [broadening formation](https://thestrat.ai/docs/price-discovery-broadening-formation/) exists by definition: the pattern is fractal. The inside bar is contraction in volatility and range. So inside → outside → inside is contraction → expansion → contraction, and the sequence continues: inside → outside → inside → expansion. The second inside bar means equilibrium has formed. In strat numbers the last three bars read [3-1-2](https://thestrat.ai/docs/3-1-2/) once the break fires.

## Trigger and magnitude

**Trigger:** the break of the second inside bar. **Direction:** the outside bar’s bias, confirmed by the inside bar breaking that side in force. **Magnitude:** the other side of the outside bar is breached: if the inside bar is taken to the downside, magnitude is at least the low of the outside bar; same logic on the upside.

[Figure: Inside bar (1), outside bar (3), second inside bar (1). The break of the second inside bar is the trigger; here it breaks upside and magnitude is at least the outside bar’s high.]

## Gauging magnitude on the lower timeframe

Drop to a lower timeframe to gauge the move. A daily inside-outside-inside contains a 60-minute fractal triangle: lower lows plus higher highs, then an [inside bar](https://thestrat.ai/docs/inside-bar/) that was neither higher than the prior high nor lower than the prior low. The triangle expands off the actionable signal.

The embedded outside bar is the warning that the range is about to broaden violently. See [the 3 universal truths](https://thestrat.ai/docs/the-3-universal-truths-that-govern-price/) and [timing breakouts](https://thestrat.ai/docs/timing-breakouts/) for the surrounding context, and [full timeframe continuity](https://thestrat.ai/docs/full-timeframe-continuity/) before taking the break.

## On the chart

DOCN, daily bars, into the May 5 2026 earnings. The sequence is 1-3-1-3-1-3-1-2u-2u-2u. The pattern does not have to resolve on the first expansion: three 3s print inside the same range, each one sold straight back inside, each pause coiling tighter. What you are waiting for is the 2 that leaves the previous range and stays out: May 1 breaks the range high at 99.23, May 4 holds outside, and May 5 gaps 40% on earnings.

[Figure: DOCN, April 20 to May 5 2026, daily. The coil alternates 1s and 3s inside one range (the pattern continuing bar after bar) until the 2u that leaves the range and stays out. The range lines start at the bars that made them and extend forward only.]

## Execution rules

**Entry:** the break of the second inside bar, in the direction of the outside bar’s bias. The break is the confirmation. **Stop:** the other side of the second 1, exactly as on the [3-1-2](https://thestrat.ai/docs/3-1-2/), and never the far side of the 3, which is a [broadening formation](https://thestrat.ai/docs/price-discovery-broadening-formation/). **Target:** the other side of the outside bar, then the higher timeframe’s [levels of reclaim](https://thestrat.ai/docs/levels-of-reclaim/) under [FTFC](https://thestrat.ai/docs/full-timeframe-continuity/). Full treatment: [Types of Reversals](https://thestrat.ai/docs/types-of-reversals/).

**Related:** [Inside Bar](https://thestrat.ai/docs/inside-bar/) · [3-1-2](https://thestrat.ai/docs/3-1-2/) · [Price Discovery & Broadening Formations](https://thestrat.ai/docs/price-discovery-broadening-formation/)
**Back to:** [Actionable Signals →](https://thestrat.ai/docs/actionable-signals/)

TheStrat was developed by Rob Smith. These docs are written by Alex Sopa (AlexsOptions) and quote his teaching.