Inside Bars
Overview
An inside bar is a candle completely contained within the range (high to low) of the previous candle. It represents a contraction of volatility and indecision. Inside bars are used as breakout setups — traders wait for price to break above or below the inside bar's range (or the 'mother bar' range) to enter.
Key Concepts
Entire second candle within the first (mother) candle's range, Multiple inside bars (inside-inside bar) increase the compression, Mother bar often represents a strong trend candle, The breakout direction determines the trade
Entry Signals
Inside bar at a key support/resistance level, Inside bar after a strong trend move (continuation setup), Break of the inside bar range with volume, Multiple inside bars creating maximum compression
Exit Signals
Enter on break of inside bar high (bullish) or low (bearish), Stop on the opposite side of the inside bar, Target the measured move or next key level
Best Timeframes
4H, Daily are optimal; works on lower timeframes with faster execution
Pro Tips
Inside bars are best traded as breakout setups, not reversal signals. The mother bar defines the true range. If trading daily, you can use 4H for a tighter entry after the daily inside bar forms.
More Topics in This Category
Piercing Line & Dark Cloud Cover
The piercing line is a two-candle bullish reversal pattern where a down candle is followed by an up candle that opens below the prior low and closes above the midpoint of the prior body. The dark cloud cover is its bearish counterpart — an up candle followed by a down candle that opens above the prior high and closes below the midpoint. Both patterns signal a potential shift in sentiment when they appear at key support or resistance levels.
Morning & Evening Star
The morning star is a three-candle bullish reversal: a large bearish candle, a small body candle (the star) that gaps down, and a large bullish candle that closes well into the first candle's body. The evening star is the bearish mirror. These are among the strongest candlestick reversal patterns.
Continuation Triangles
While not strictly a candlestick pattern, continuation triangles (ascending, descending, symmetrical) are multi-candle patterns where price contracts between converging trendlines. Breakouts from triangles tend to continue the prior trend. Triangles are measured-move patterns — the target equals the height of the triangle projected from the breakout point.
Tweezer Tops & Bottoms
Tweezers are two-candle patterns where both candles test the same high (tweezer top) or low (tweezer bottom). The first candle extends the trend and the second candle reverses. The matching highs/lows create a visual 'tweezers' shape indicating a rejection level.