Inside bars are simple yet powerful patterns that show market consolidation before an explosive move. Learning to spot and trade them gives you a major edge in timing breakouts.
What Is an Inside Bar?
An inside bar forms when the current candle’s high and low are contained within the previous candle’s range. It represents indecision — but often leads to a breakout once momentum returns.
How to Trade Inside Bars
Identify an inside bar near key levels or within a trending market.
Place a buy stop above the mother candle’s high and a sell stop below its low.
Whichever side breaks first signals direction.
Pro Tip:
Use the daily chart for more reliable signals and filter false breakouts with overall trend direction.
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