THESTRAT / DOCS

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

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

The outside bar tells you a 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 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.

Inside-outside-inside: inside bar, outside bar, second inside bar, then expansion through the outside bar’s high Magnitude — the far side of the outside bar Trigger — the second inside bar’s break 1 3 1 2u Contraction → expansion → contraction → expansion TheStrat.AI
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 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 and timing breakouts for the surrounding context, and 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.

1-3-1 continuation on DOCN daily, April-May 2026: the coil prints 1-3-1-3-1-3-1 inside one range (99.23 over 90.11) — expansion and equilibrium alternating — then 2u, 2u, 2u: the break that finally leaves the previous range and stays out, straight into the May 5 earnings gap to 153. $90 $100 $110 $120 $130 $140 $150 1 2u 1 3 1 3 1 3 1 2u 2u 2u The 1-3-1 can keep going — DOCN daily, into May 5 earnings the range: the first 3’s high 99.23 over the biggest 3’s low 90.11 the resolution: the 2u that leaves the range and STAYS out the coil: a 1, then a 3, then a 1, then a 3 — expansion and equilibrium alternating inside ONE range three 3s, four 1s — the pattern can CONTINUE: every expansion gets sold back inside, every pause coils tighter until the break that leaves the range… …and STAYS out — 2u again: the previous range is finally resolved then the earnings gap: +40%. The 1s and 3s were the spring; the 2s that stay out are the release real data, DOCN daily, April 20 – May 5 2026 · 1-3-1-3-1-3-1-2u-2u-2u TheStrat.AI
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, and never the far side of the 3, which is a broadening formation. Target: the other side of the outside bar, then the higher timeframe’s levels of reclaim under FTFC. Full treatment: Types of Reversals.

Related: Inside Bar · 3-1-2 · Price Discovery & Broadening Formations
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TheStrat was developed by Rob Smith. These docs are written by Alex Sopa (AlexsOptions) and quote his teaching. Work in progress: spotted an error? Tell Alex.

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