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
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.
Harami Patterns
A harami (Japanese for 'pregnant') is a two-candle pattern where a small candle is completely contained within the prior candle's body. A bullish harami appears in downtrends; a bearish harami in uptrends. Haramis signal fading momentum but require confirmation before trading.
Engulfing Patterns
A bullish engulfing pattern occurs when a large green candle completely engulfs the prior red candle near the bottom of a trend. A bearish engulfing is the opposite — a large red candle swallows the prior green candle at the top. Engulfing patterns are among the most reliable two-candle reversal signals.
Three White Soldiers / Black Crows
Three white soldiers are three consecutive large bullish candles with progressively higher closes, each opening within the prior candle's body. Three black crows are the bearish equivalent. These patterns signal strong momentum shifts and conviction from buyers (soldiers) or sellers (crows).