An inside bar is a candle whose high and low both sit within the previous candle's range. The larger prior candle is the mother bar, and the inside bar is a pause - a tightening of range that often precedes a breakout in one direction or the other.
What it looks like
Inside bars work best on higher timeframes, where they represent a genuine consolidation rather than random noise. With the trend, an inside bar after a strong move is a continuation setup - a brief rest before the trend resumes. At a major level, an inside bar can precede a reversal. Either way, the trade is the break of the mother bar's high or low, not the inside bar itself.
Anatomy at a glance
How to trade it
A candle is a trigger, not a system. Take it only where it means something - at a level, with the trend - and give it a clear stop and target:
Where traders go wrong: taking the candle anywhere. In the middle of a range this signal is noise. Wait for it to form at support or resistance or in line with the trend, and size the trade with the position size calculator so a failed signal costs a small, fixed amount.
Prove it before you trade it
This candle is a hypothesis about what happens next, nothing more. Replay real charts, take the pattern only at meaningful levels across a large sample, and read the win rate and risk-reward it delivers on your pairs before you rely on it.
Inside Bar FAQ
What is an inside bar in trading?
An inside bar is a candle whose entire range - both its high and its low - falls within the previous candle's range. It marks a pause and a tightening of volatility, often before a breakout. The previous, larger candle is called the mother bar, and the breakout of its range is what traders act on.
Is an inside bar bullish or bearish?
Neither by default - it is a neutral pause that breaks in whichever direction price resolves. With the trend, an inside bar usually signals continuation; at a major level it can precede a reversal. The direction of the break of the mother bar's range tells you which way to trade.
How do you trade an inside bar?
Trade the breakout, not the inside bar itself. Enter on a break of the mother bar's high or low - with the trend for a continuation setup - and place the stop on the opposite side of the mother bar or the inside bar. Higher timeframes give cleaner, more reliable inside-bar breakouts than low ones.