Courses / Candlestick Patterns Masterclass

Inside Bar and Outside Bar

Compression and expansion: how inside and outside bars set up breakouts.

An inside bar has its high and low fully within the previous bar. It shows compression. A break of the mother bar high or low often starts the next move.

An outside bar has a range that engulfs the previous bar, showing expansion and sometimes a trap.

Trade inside bars in the direction of the higher timeframe trend, with the stop on the opposite side of the mother bar.

Key takeaways

• Inside bar = compression, outside bar = expansion
• Trade the break of the mother bar in trend direction
• Beware false breakouts without a close

Quiz

• An inside bar is: Answer: Within the previous bar range. Its high and low are inside the prior range.
• An inside bar shows: Answer: Compression. Volatility contracts.
• You should trade an inside bar: Answer: In the direction of the higher timeframe trend. Trend alignment improves odds.

Educational content, not financial advice.