Home / Price Action / Ch 3: 10 Bar Patterns Every Price Action Trader Knows
Ch 3 · Price Action
10 Bar Patterns Every Price Action Trader Knows
Reversal bar, Key Reversal, Exhaustion bar, Pin bar (Pinocchio), Two-bar reversal, Three-bar reversal, Three-bar pullback, Inside bar, Outside bar, NR7 — each with an entry template, stop, and failure mode.
📖 22 min
These ten patterns cover roughly 90% of the actionable single-bar and short-sequence setups a discretionary trader will encounter. For each: the shape, the ideal context, the entry template, the stop, and the failure mode that kills the trade.
💡 How to use this chapter
Don't try to memorise all ten at once. Pick the two or three that suit your temperament and timeframe (see the "Which patterns fit your style" section at the end) and specialise. Depth beats breadth.
3.1 Reversal Bar
A bar whose low is lower than the previous bar's low, but whose close is higher than the previous bar's close (bullish reversal), or the mirror at a top (bearish reversal). The pattern captures the moment sellers pushed lower, failed, and buyers took control back within the same bar.
Entry: break of the reversal bar's high (bullish) or low (bearish)
Stop: below the reversal bar's low (bullish trade)
Context needed: at a well-tested support/resistance, after a defined swing move
Fails when: in the middle of a range with no level backing; volume is thin
3.2 Key Reversal Bar
A stricter version of the reversal bar. Opens beyond the previous bar's high (in a downtrend) or low (in an uptrend), then reverses to close on the opposite extreme. Signals a decisive shift in intraday intent.
Structure: gap in the trend direction, then a full reversal by close
Entry: at market on next bar, or break of the bar's high/low
Stop: the extreme wick of the key reversal itself
Reliability: highest of the reversal-bar family; sits at 60–65% follow-through when at a level
3.3 Exhaustion Bar
The last bar of a trend. Prints an unusually large body in the direction of the trend, on high volume, but the next bar fails to continue and instead reverses. Marks capitulation buying (at a top) or selling (at a bottom) as the trend runs out of new participants.
Signature: large body, high volume, then a clear failure to continue on the next bar
Entry: after the next bar confirms failure — enter opposite direction on break of the failure bar's opposite extreme
Stop: beyond the exhaustion bar's wick
Warning: only tradable if the two-bar sequence is at a meaningful level. In a strong trend, exhaustion bars can be followed by another leg after a brief pause
3.4 Pin Bar (Pinocchio Bar)
A bar with a very long wick in one direction, small body, and short opposite wick. The "nose" of the bar is the long wick — where price probed and got rejected. Named after Pinocchio because the long "nose" is where the market lied about direction before snapping back.
Structure: wick at least 2× the body; body in the opposite half of the bar's range
Entry: break of the pin bar's body high (bullish) or low (bearish)
Stop: beyond the tip of the nose (long wick end)
Best context: at a horizontal S/R, at a trendline test, or at a moving-average retest
Fails when: in the middle of a range with no level, or after 5+ consecutive pin bars (market is choppy, none of them mean anything)
✅ The pin bar is the single most-taught price action pattern for a reason
Clear rules, quick to identify, works across timeframes. If you're new to price action and can only learn one bar pattern to start with, this is it.
3.5 Two-Bar Reversal
Two consecutive bars: the first is a strong bar in the trend direction (e.g., large green bar in an uptrend); the second is a strong bar in the opposite direction (large red bar). Together they form a "V" or inverse-V. The second bar's close often lands near the first bar's open — indicating a full retracement within just two bars.
Bullish version: big red bar → big green bar closing near or above the red bar's open. Reversal at a support
Bearish version: mirror at resistance
Entry: break of the second bar's extreme in the reversal direction
Stop: beyond the pattern's lowest low (bullish) or highest high (bearish)
3.6 Three-Bar Reversal
A more conservative reversal. Bar 1 makes a new extreme in the trend direction. Bar 2 stalls (small body, doji, or inside bar). Bar 3 breaks in the opposite direction, closing beyond bar 1's open. The middle bar of indecision gives you confirmation before entry.
Entry: at close of bar 3 or on next bar's open
Stop: beyond the extreme of bar 1
Trade-off: higher confirmation, slightly late entry vs the two-bar reversal
3.7 Three-Bar Pullback
A continuation pattern, not a reversal. In an uptrend, three consecutive small-bodied bearish or mixed bars form a shallow pullback. When the fourth bar breaks the third's high, the trend resumes. Bearish mirror in a downtrend.
Entry: break of the highest high of the 3-bar pullback (in an uptrend)
Stop: below the lowest low of the 3-bar pullback
Filter: the pullback should retrace less than 50% of the last impulse; deeper retraces suggest trend weakness
3.8 Inside Bar
A bar whose high is lower than the previous bar's high AND whose low is higher than the previous bar's low — completely contained inside the previous bar's range. Signals compression, often precedes expansion.
Entry: break of the "mother" bar's high or low, in the direction of the break
Stop: the opposite extreme of the mother bar
Ideal setup: inside bar at a level in the direction of the higher-timeframe trend
Nested inside bars (2, 3, 4 consecutive inside bars) compress volatility further; the eventual break is often violent
3.9 Outside Bar
The opposite of inside bar. The current bar's high is higher AND its low is lower than the previous bar's range — completely engulfs the previous bar. Signals a volatility expansion and often a reversal.
Structure: range expansion, close often near one extreme
Bullish outside: engulfs prior bar with a close near the high
Bearish outside: engulfs prior bar with a close near the low
Entry: in the direction of the close, on break of the outside bar's extreme
3.10 NR7 (Narrow Range 7)
A bar whose range (high − low) is the narrowest of the last 7 bars. Signals extreme volatility compression — the setup for an imminent expansion.
Structure: narrowest range in 7-bar window; often has a small body too
Entry: break of the NR7 bar's high or low, in the direction of the break
Stop: the opposite extreme of the NR7 bar
Variant: NR7 that is also an inside bar is even higher-quality — extreme compression
AdvancedWhich patterns fit your style — a matrix
| Trader style | Timeframe | Recommended bar patterns |
|---|---|---|
| Positional (weekly, monthly) | Daily / weekly | Reversal bar, Key reversal, Exhaustion, 2-bar reversal |
| Swing (3–10 day hold) | Daily / 4h | Pin bar, 3-bar reversal, 3-bar pullback, Inside bar |
| Intraday (same session) | 15-min / 5-min | Pin bar, Inside bar, NR7, Outside bar |
| Scalping (minutes) | 5-min / 3-min | Pin bar, Outside bar, NR7 |
Rule of thumb: faster timeframe → simpler patterns. There isn't time on a 3-min chart to wait for a 3-bar reversal to complete before the setup expires. Slower timeframes reward more patient, multi-bar patterns.
3.11 The universal filters
Every bar pattern above has better win-rate when these four filters agree:
At a level — never trade a bar pattern in the middle of a range
Aligned with higher-timeframe trend — a bullish reversal in a daily downtrend at intraday support is a weak setup; the same reversal in a daily uptrend at intraday support is a strong setup
Volume expansion on the pattern bar or the trigger bar — no volume = no participation = no follow-through
Room to run — at least 2:1 reward-to-risk to the next opposing level, otherwise skip
Any pattern with 4-of-4 filters is a high-quality setup. 3-of-4 is tradable. 2-of-4 is a coin flip. Below that, skip.
3.12 On the chart
Two years of daily Nifty 50. Practice: pick 5 bars that visually match one of the patterns above. Identify the pattern, the context (level? trend?), and decide whether you would have taken the trade.