What is an Inside Bar?
Inside Bar is a type of price action pattern that occurs when the entire price range (high to low) of one candlestick is smaller than the previous candlestick, meaning its open and close prices fall within the range of the prior candle.
The characteristics of an Inside Bar.
An Inside Bar is a smaller candlestick that forms after a larger candlestick (called the Mother Bar). The body and wicks of the Inside Bar are completely contained within the range of the previous bar. An Inside Bar can appear as a single candlestick or as multiple consecutive candlesticks.
Trading using the Inside Bar technique
An inside bar that occurs in both uptrends and downtrends indicates market indecision, causing the price to be unable to show a clear direction until it can close either above or below the mother bar.
For a Buy signal, we use the Inside Bar as an indicator to find the entry point by placing a Buy order when the price breaks out above the high of the Mother Bar.
For a Sell signal, we use the Inside Bar as an entry point to place a Buy order when the price breaks out below the low of the Mother Bar.
