An Inside Bar develops during a strong downtrend when the trading range is completely within the high and low of the previous bar.
This suggests the pressure between buyers and sellers is becoming more evenly balanced.
Bears might be weakening in power while bulls might be increasing in power.
What does an Inside Bar look like?
An Inside Bar must stay completely WITHIN the range of the bar immediately before it.
This means that the second bar must have a lower high and a higher lowthan the first bar.
What does an Inside Bar mean?
An Inside Bar potentially means that the price action recently dominated by the sellers is now weakening.
Since price volatility has subsided and the price stayed completely within the range of the previous bar, either buying pressure has increased or selling pressure has decreased.
This “pause” in price action does not necessarily signal any clear strength from either buyers or sellers.
Sellers could be near exhaustion and the price may start to move higher OR they are merely taking a breather before pushing the price lower (and making a lower low).
How to trade an Inside Bar?
- Place stop orders to trade a breakout in either direction: a buy stop order above its high, and a sell stop order below its low. Once one order is triggered, cancel the other order.
- Place only one order (buy or sell) on a breakout in the direction of the primary trend.
FAQs
According to the first definition, an Inside Bar has a higher low and a lower high than the previous bar. According to the second definition, both the open and close of the Inside Bar are within the range of the previous bar's open and close. Moreover, these patterns can also be combined with other patterns.
Is an inside bar bullish or bearish? ›
Is an inside bar bullish or bearish? It does not inherently indicate a bullish or bearish bias. It simply represents a period of consolidation or indecision in the market. So, the formation occurring within an uptrend can be bullish and signal a trend continuation or bearish and signal a trend reversal.
What is the success rate of inside bar? ›
This pair caught 23 valid inside bar signals for the period, winning 19 positions or 79.17% of it all. That's even better than its previous 79.17% win rate in Q3, but did it catch bigger wins? Well, not exactly. The pair was able to rack up 238 pips or a 20.54% gain, just shy of the earlier 257-pip or 23.94% win in Q3.
What is the inside bar psychology? ›
Psychology behind the Inside Bar
Inside Bar pattern basically shows a period of indecision or consolidation in the market. This is usually formed following a strong move in the market as it pauses to consolidate before making its next move.
Is inside bar a reversal? ›
Trending markets allow for the trading of inside bars in the direction of the trend; when done so, they are referred to as “breakout plays” or inside bar price action breakout patterns. They may also be traded against the trend, usually from important chart levels; when done so, they are known as inside bar reversals.
What is the inside bar criteria? ›
Facts about Inside Bar Pattern
- Inside bar pattern within the trading range (or shadow) of the preceding bar.
- It is at least a two-candlestick formation.
- Mother candlestick can be either bullish(green) or bearish(red)
- The inside bar chart pattern can be bullish or bearish.
An “inside bar” pattern is a two-bar price action trading strategy in which the inside bar is smaller and within the high to low range of the prior bar, i.e. the high is lower than the previous bar's high, and the low is higher than the previous bar's low.
What is the difference between inside bar and outside bar? ›
Inside bars are generally trend trading patterns and outside bars are direction confirming patterns based on closed direction. Inside outside combo Pattern: In an IO ( Inside outside) pattern we need an inside bar setup, followed by an outside bar setup. Example is shown below.
Does the color of the inside bar matter? ›
As you can deduct from the name of this pattern, an inside bar is a 2-candlestick pattern, in which the second candlestick is completely engulfed by the first one. The first candlestick is called 'mother bar', while the second one bears the name of the pattern itself. The color of the inside bar is not important.
What is the 15 min inside bar strategy? ›
If you are a scalper, you can use the inside bar in a 15-minute timeframe or lower. Using this forex trading strategy, you look for the inside bar in an uptrend or downtrend, wait for the pattern to fully appear, and double-check the price action through an indicator or support/resistance levels.
The Fakey Pattern (Inside Bar False Break Out)
When price initially breaks out from the inside bar pattern but then quickly reverses, creating a false-break, and closes back within the range of the mother bar or inside bar, we have a fakey pattern. So, think of it like this: Inside Bar + False-Breakout = Fakey pattern.
Is inside bar the same as harami? ›
An inside bar is also similar to a bullish or a bearish harami candlestick pattern. The main difference being that with an inside bar, the highs and lows are considered while the real body is ignored.
Why are inside bars important? ›
An Inside Bar potentially means that the price action recently dominated by the sellers is now weakening. Since price volatility has subsided and the price stayed completely within the range of the previous bar, either buying pressure has increased or selling pressure has decreased.
Is inside bar a continuation pattern? ›
What is an inside bar? The inside bar is a popular reversal/continuation candle formation that only requires two candles to present itself. This pattern is a direct play on short-term market sentiment looking to enter before the 'big moves' that may take place in the market.
What is an internal bar? ›
Internal Bar Strength (IBS) is an idea that has been around for some time. IBS is based on the position of the day's close in relation to the day's range: it takes a value of 0 if the closing price is the lowest price of the day, and 1 if the closing price is the highest price of the day.
What is the difference between pin bar and inside bar? ›
A pin bar is a price action strategy that shows rejection of price and indicates a potential reversal is imminent. An inside bar is a price action strategy that shows consolidation and that a potential breakout is imminent.
What is the difference between inside day and inside bar? ›
Inside Bar is any price bar that lies within the range of the price bar before it. Inside Day is an Inside Bar on the daily chart. Harami is a candlestick pattern that focuses on the range of the candle body. (Candle body refers to the range between the open and close price of a bar.)
