Bdorts · TWI Education Series

The Strat

Price only does three things relative to the candle before it. This guide teaches the read Bdorts uses: name the bar, align the timeframes, and let context, not the pattern alone, decide the trade.

The 1 / 2 / 3 languageFull timeframe continuity14 core patternsReal chart examplesInteractive quiz

Built from the Strat framework Bdorts trades in the TWI live room every session. Follow him at @BdortsTrading.

Introduction

Price Has Three Jobs

The Strat, created by Rob Smith, is a price-action system built around reading candles and aligning multiple timeframes. The core idea is deliberately narrow: relative to the candle before it, price only ever does three things.

It stays inside the prior range, it breaks one side, or it breaks both sides. Every setup in this guide is built from those three behaviors. Name the behavior first, then decide what it means.

Inside bar

Price stays inside the prior candle range. Neither side breaks. Consolidation and compression.

Directional bar

Price breaks one side only, the high or the low but not both. A directional decision: 2U up, 2D down.

Outside bar

Price breaks both the high and the low of the prior candle. Expansion and volatility.

The read to remember: 1 compresses, 2 chooses a side, 3 expands. The sequence tells you what happened. Context tells you what it may mean.

Part 1: The Language

Reading the 1 / 2 / 3

Start with the range. Compare the current candle against the prior candle and name the behavior before adding a story. The gray candle below is the prior bar; the colored candle is the current one.

1Compare ranges

Inside bar

The current candle stays inside the prior candle range. It breaks neither side. That is compression, not a direction by itself.

2UCompare ranges

Directional bar up

The current candle breaks the prior high but not the prior low. Buyers took one side. Directional, one way only.

2DCompare ranges

Directional bar down

The current candle breaks the prior low but not the prior high. Sellers took one side. Directional, one way only.

3Compare ranges

Outside bar

The current candle breaks both the prior high and the prior low. Volatility expanded through both sides.

Two shorthands worth knowing: a directional bar up is a 2U, and a directional bar down is a 2D. The whole Strat vocabulary is built by stringing these four readings together.

Part 2: Context

Full Timeframe Continuity

A huge part of The Strat is timeframe continuity, or FTFC: checking whether the monthly, weekly, daily, and 4H are all moving the same way. Trades carry higher probability when the timeframes line up, all bullish or all bearish, instead of fighting each other.

The timeframes do not need to be identical, but alignment gives the setup a stronger wind at its back. Read the higher timeframes first, then zoom in to the trigger.

Fig. 01Timeframe continuity

When the monthly, weekly, daily, and intraday all point the same direction, a pattern on the lower timeframe is trading with the trend rather than against it.

Repeating Sequences to Watch

2-1-2

Continuation

A directional move, a pause inside a candle, then a break that resumes the existing direction.

3-1-2

Reversal

Outside-bar volatility, then compression, then a break that resolves the setup the other way.

2-2

Reversal

A directional move followed by a directional move the other way, reversing the prior bar.

The Strat leans on

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Pure price action

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Avoiding lagging indicators

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Broadening formations and liquidity levels

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Tight risk management

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Mechanical, repeatable setups

Part 3: The Patterns

The Core Strat Patterns

Each pattern is just a sequence of the 1 / 2 / 3 readings. These are pattern descriptions, not trade instructions. The same sequence can mean different things depending on timeframe, location, and market condition.

Bullish2-1-2UContinuation

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A directional move up pauses inside a narrow candle, then breaks the inside bar high to continue higher.

Context. The cleanest read comes when the higher timeframes already agree with the bullish direction.

Bearish2-1-2DContinuation

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A directional move down compresses inside a candle, then breaks the inside bar low and resumes the move.

Context. The setup is stronger when the name shows relative weakness and the broader market confirms the direction.

Bullish2-1-2Rev UReversal

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A directional bar down pauses inside a candle, then the break back up reverses through the prior move.

Context. Unlike the continuation, the two directional bars point opposite ways. The inside bar is the pivot.

Bearish2-1-2Rev DReversal

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A directional bar up pauses inside a candle, then the break back down reverses through the prior move.

Context. Unlike the continuation, the two directional bars point opposite ways. The inside bar is the pivot.

Bearish3-1-2DReversal

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An outside bar expands both ways, price compresses, and the break lower resolves the volatility to the downside.

Context. The outside bar is the context. The 2D break is the trigger. Do not treat the 3 as the entry by itself.

Bullish3-1-2UReversal

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After a wide outside bar, the inside bar builds a defined range and the upside break takes control.

Context. Location matters. A bullish break at a meaningful support area reads differently from one mid-range.

Bullish1-2-2Rev UReversal

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An inside bar breaks down first, then reverses back through the prior directional bar to take the upside.

Context. The reversal needs room. Mark the invalidation level before the second break occurs.

Bearish1-2-2Rev DReversal

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An inside bar breaks up first, then fails and breaks down through the prior directional bar.

Context. Relative weakness and a clear level keep the failed first break from turning into a chase.

Bullish2-2Rev UReversal

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A directional bar down is followed by a bar that breaks its high, shifting control back to buyers.

Context. The second bar is the decision point. The first bar supplies the reference range and the failed direction.

Bearish2-2Rev DReversal

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A directional bar up is followed by a break of its low, shifting control back to sellers.

Context. A clean location, sufficient liquidity, and a defined stop matter more than the pattern name.

Bullish3-2-2UReversal

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An outside bar sets the range, a directional bar down fails to follow through, and the break back up reverses the move.

Context. The outside bar is the expansion. The reversal only confirms when the final 2 breaks back through the other way.

Bearish3-2-2DReversal

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An outside bar sets the range, a directional bar up stalls, and the break back down reverses the move.

Context. Read the failure of the 2 up. The 2 down through the range is the trigger, not the outside bar by itself.

Bullish1-3UReversal

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An inside bar coils, then a single outside bar engulfs both of its sides and closes up, reversing in one bar.

Context. The whole signal is the outside bar and where it closes. It takes both sides of the inside bar and finishes strong.

Bearish1-3DReversal

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An inside bar coils, then a single outside bar engulfs both of its sides and closes down, reversing in one bar.

Context. The whole signal is the outside bar and where it closes. It takes both sides of the inside bar and finishes weak.

Part 3: The Patterns

Broadening Formations

Broadening formations are one of the core concepts in The Strat. Rob Smith teaches that markets naturally expand in volatility over time, making a higher high, then a lower low, then another higher high, then another lower low. That prints a megaphone shape on the chart.

The Strat is built on the idea that markets constantly rotate between consolidation and expansion, and that price is always seeking liquidity at prior highs and lows.

Fig. 02Megaphone structure

Volatility expands over time: each swing prints a higher high and then a lower low, opening a megaphone. Price keeps hunting liquidity at the outer edges, and a break of one edge often runs back toward the other.

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Mark both edges. The most recent high and low are the active boundaries of the structure.

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Expect rotation. Expansion tends to travel from one side of the structure toward the other.

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Respect the break. A break of one edge can run toward the opposite side, but confirmation and risk still decide the trade.

Part 4: Application

Real Chart Examples

These are adapted from Bdorts' guide. Use them to practice naming the sequence, locating the trigger, and asking what the larger chart was doing around it. They are historical illustrations, not promises of future results.

$ARM 2-1-2U Weekly chart example — A weekly continuation. The move up pauses in an inside bar, then breaks it to press toward the magnitude target above.

$LLY 1-2-2Rev Daily chart example — The first directional break fails and reverses back through the prior bar. The reversal reference is marked on the chart.

$CRCL 2-1-2U Monthly Swing chart example — A higher-timeframe swing. The monthly 2-1-2U carries a much larger magnitude and a longer holding period.

$SPX 2-2Rev Daily chart example — A two-bar control shift on the index. The second directional bar reverses the first and sets the magnitude.

$ARM Failed 2D Weekly chart example — A reminder that failure is information. The 2D fails to hold, flips back up, and the failed break becomes the signal.

Part 4: Application

What Bdorts Looks For

The pattern itself is only one piece of the puzzle. Bdorts does not take every 2-1-2 or 3-1-2 he sees. Before a setup becomes a trade idea, it runs through the same filters.

Timeframe continuity

Read alignment across the monthly, weekly, and daily before giving an intraday pattern too much weight.

A clean Strat pattern

Name the sequence precisely: 2-1-2, 3-1-2, 1-3-2, 1-2-2Rev, 3-2-2Rev, 22Rev, or F2D.

Relative strength or weakness

Ask whether the name is outperforming or underperforming the market, and whether there is a reason for it.

Favorable risk-to-reward

Mark the invalidation level first. Look for a favorable profile, typically two-to-one or better.

Liquidity and volume

Favor liquid names with enough volume to support the idea and clean fills at the level.

Elevated relative volume

An elevated RVOL read shows the setup is drawing real participation, not moving on a thin tape.

Context, timeframe continuity, relative strength or weakness, and location on the chart all influence whether the trade is worth taking. The name describes the behavior. Everything around it decides the trade.

Part 5: Lock It In

Test Your Knowledge

Question 1 / 6

What does a 1 candle represent?

The whole framework, one page

Cheat Sheet

The Strat Cheat Sheet

Bdorts · Trade With Insight

Quick reference

The 1 / 2 / 3 language

1Inside bar. Compression, no break.
2UBreaks the prior high only. Up.
2DBreaks the prior low only. Down.
3Breaks both sides. Expansion.

Context first

Full timeframe continuity across the monthly, weekly, and daily. Relative strength or weakness. Location and liquidity. The name is never the whole trade.

Before a trade

✓Timeframe continuity
✓A clean Strat pattern
✓Relative strength or weakness
✓Favorable risk-to-reward
✓Liquidity and volume
✓Elevated relative volume

Continuation

2-1-2UBullish continuation
2-1-2DBearish continuation

Reversal

2-1-2Rev UBullish reversal
2-1-2Rev DBearish reversal
3-1-2DBearish reversal
3-1-2UBullish reversal
1-2-2Rev UBullish reversal
1-2-2Rev DBearish reversal
2-2Rev UBullish reversal
2-2Rev DBearish reversal
3-2-2UBullish reversal
3-2-2DBearish reversal
1-3UOne-bar reversal
1-3DOne-bar reversal

Read the bar. Respect the context. · tradewithinsight.com/bdorts/strat

Pattern Index

Every core Strat sequence at a glance

The Strat Cheat Sheet

2-1-2UBullish continuation

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2-1-2DBearish continuation

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2-1-2Rev UBullish reversal

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2-1-2Rev DBearish reversal

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3-1-2DBearish reversal

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3-1-2UBullish reversal

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1-2-2Rev UBullish reversal

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1-2-2Rev DBearish reversal

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2-2Rev UBullish reversal

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2-2Rev DBearish reversal

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3-2-2UBullish reversal

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3-2-2DBearish reversal

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1-3UOne-bar reversal

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1-3DOne-bar reversal

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Green closes up, rose closes down, purple is compression or expansion. · tradewithinsight.com/bdorts/strat

Download opens your browser print dialog. Choose “Save as PDF” for a clean two-page reference: the summary, then the visual pattern index.

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Disclaimer

This guide is provided for informational and educational purposes only and does not constitute investment advice. Nothing on this page is a solicitation or recommendation to buy or sell any security or financial instrument. Trading involves substantial risk of loss. Past performance does not guarantee future results, and market conditions and views can change without notice. The chart examples are historical illustrations and do not represent typical results or a promise of future performance. Always do your own research and consult a licensed financial professional before making investment decisions.

Trade With Insight

Read the bar. Respect the context.