The “ii” Pattern
two inside bars in a row — a tighter coil, a more reliable break, the same-size moveAn “ii” is two consecutive inside days: yesterday fit inside the day before, and today fit inside yesterday. Al Brooks calls this a breakout-mode setup — the market has compressed, then compressed again inside the compression, and the next session is the release. The single-inside-day study (H13) left this as an explicit open question: “a streak-length analysis is a natural extension.” This is that extension. The question is sharp: does a double coil break out more often than a single one, and does the tighter coil release a bigger move? Across 76 “ii” events on 15 liquid US names (Jan 2022 – May 2026), the answer is yes to the first and — surprisingly — no to the second.
The day after an “ii” expands beyond the coil in nearly 6 of 7 cases.
A lone inside bar breaks out less often — and the two CIs don’t overlap, so the double coil is reliably higher-conviction.
The tighter coil does NOT give a bigger move. Same size, off a tighter base.
Breakout (range-expansion) rate by coil depth
Each step deeper into compression lifts the breakout rate: 46.3% → 72.3% → 85.5%. The “ii” CI lower bound (77.6%) sits above the single-inside CI upper bound (74.4%) — a real separation, not noise. 15 tickers · 2022–2026 · n=5,000 bootstrap.
What IS better: conviction
A second inside bar lifts the breakout rate from 72.3% to 85.5%— a +13 pp jump, with non-overlapping CIs. Brooks’ framing holds: the longer the market refuses to leave a shrinking range, the more certain it is to leave it next. The coil itself is tighter too — the second inside bar averages 0.58 ATRvs the single inside day’s 0.67 ATR. So relative to its own base, the “ii” breakout expands 1.55× (vs 1.35× for a single inside). The spring is wound tighter, and it releases more reliably.
What is NOT better: size & direction
The tempting intuition — “tighter coil, bigger explosion” — is wrong in absolute terms. The breakout-day range averages 0.91 ATR, statistically identical to the 0.91 ATR after a single inside day (difference −0.01 ATR, CI95 [−0.09, +0.08] — straddles zero). The double coil buys you a more certain move, not a larger one. And direction stays a coin flip: carry rate 47.4% (CI95 [36.8%, 59.2%]), indistinguishable from 50% — the same null H13 found for single inside days.
Per-ticker detail
Sorted by “ii” count. Per-ticker samples are small (1–11 events) — read the aggregate, not any single row. Breakout-ATR vs single-ATR shows the same-size-move finding repeating name by name: the breakout column rarely beats the single-inside column.
| Ticker | N ii | Breakout % | Brk ATR | Single ATR | Dir carry |
|---|---|---|---|---|---|
| AMD | 11 | 100.0% | 0.91 | 0.97 | 45.5% |
| AAPL | 9 | 100.0% | 0.96 | 0.81 | 55.6% |
| TSLA | 9 | 55.6% | 0.91 | 0.89 | 44.4% |
| MSFT | 7 | 100.0% | 0.86 | 0.88 | 57.1% |
| SPY | 6 | 83.3% | 1.25 | 0.89 | 50.0% |
| XLK | 6 | 100.0% | 0.92 | 0.94 | 50.0% |
| IWM | 5 | 60.0% | 0.76 | 0.94 | 80.0% |
| NVDA | 5 | 80.0% | 0.94 | 0.87 | 20.0% |
| JPM | 5 | 80.0% | 0.75 | 0.97 | 40.0% |
| GOOG | 3 | 66.7% | 0.83 | 0.93 | 33.3% |
| AVGO | 3 | 100.0% | 0.62 | 0.93 | 100.0% |
| QQQ | 2 | 100.0% | 1.06 | 0.98 | 0.0% |
| XLF | 2 | 100.0% | 0.80 | 0.92 | 0.0% |
| AMZN | 2 | 50.0% | 0.66 | 0.91 | 50.0% |
| META | 1 | 100.0% | 1.22 | 0.84 | 0.0% |
What this means for trading
- An “ii” is a higher-conviction expansion flag than a single inside day. If you already treat inside days as “tomorrow will move” setups, a second inside bar sharpens that read from ~73% to ~86%. When you see two inside bars stacked, the odds the next session breaks the coil are about as high as this kind of structure gets.
- Do not size up expecting a bigger move.The breakout after an “ii” is the same absolute size (~0.91 ATR) as after a single inside day. The edge is in reliability, not magnitude. Expected-move and options-pricing math should use the same range estimate as for a single inside day — just with more confidence it shows up.
- Still wait for the break to pick a side.The 47.4% directional carry means the coil’s midpoint tells you nothing about which way it resolves. Trade the actual break of the second inside bar’s high or low — not a pre-positioned guess.
- Compression depth is a dial, not a switch.46.3% (any day) → 72.3% (one inside bar) → 85.5% (two). The breakout rate climbs monotonically with how long the market has refused to leave a shrinking range. The “iii” (three inside bars) is the next rung — too rare in this universe to measure cleanly, but the gradient points the way.
How this fits the other studies
- Inside Day:This is the direct extension of H13. The single-inside study found magnitude predictable (72.9% expansion) and direction unpredictable (49.7% carry). The “ii” keeps both lessons and adds one: depth of compression scales the reliability of expansion, but not its size.
- Outside Day: The mirror image. An outside day is a blown-out range that contractsnext session 74.3% of the time; an “ii” is a wound-up range that expands 85.5% of the time. Together they bracket the mean-reversion-of-volatility theme: extremes of range, in either direction, revert.
- Day Types:A session breaking out of an “ii” is a strong trend-day or breakout-day candidate — the kind of clean directional session the Day Types classifier flags. Double compression on the prior days feeds expansion and directionality on the breakout day.
Pre-registered verdicts
The most useful result is the split between (a) and (b): deeper compression buys you a more reliable break, not a bigger one. Traders who size up on a tight “ii” expecting an outsized move are paying for conviction they already have and magnitude that isn’t there.
Honest caveats
- Small sample.Only 76 “ii” events across 15 names in 4.4 years — double inside bars are rare. The aggregate CI is wide ([77.6%, 93.4%]), and per-ticker counts (1–11) are too thin to rank. The headline holds because the “ii” and single-inside CIs don’t overlap, but a longer history or wider universe would tighten it.
- “Expansion” is binary.Defined as breakout range > coil range. The 1.55× mean ratio says expansions are meaningful, but some are marginal. A minimum-expansion filter would sharpen the signal at the cost of even fewer events.
- Strict inside definition.Both bars must be fully contained (H ≤ prev.H AND L ≥ prev.L). Brooks also counts “ii”-like coils where a bar is inside on the body but ticks the prior high/low — a looser definition would yield more events and possibly a different rate.
- Daily OHLC only. Whether the breakout is tradeable depends on intraday path — it might come in the first 30 minutes (tradeable) or only in the close (not). An intraday-path study would refine the finding.
Methodology
76 “ii” events, 1,686 single-inside events, and 14,498 baseline pairs on 15 names (2022-01-03 – 2026-05-30) via Massive/Polygon daily bars. “ii”: day N strictly inside day N−1 AND day N−1 strictly inside day N−2 (today is the second, tightest inside bar; tomorrow is the breakout). Single inside: day N inside N−1 but N−1 not inside N−2. Expansion: breakout-day range (H−L) > coil (day N) range. ATR normalization uses Wilder ATR(14) strictly pre-signal. Directional carry: next open vs the coil’s midpoint → predicts next close direction. Bootstrap CI (n=5,000, seed=17). Engine: scripts/ml/backtest_ii_pattern.py. Run 2026-06-23.
Related: Inside Day · Outside Day · Day Types