An inside bar has a range:

Fully within the previous bar. It is contained inside the mother bar.

Which direction should you favour?

With the higher timeframe trend. Trade with the trend.

A tight, defined stop. The structure gives a clear stop level.

Beginner · 7 min read

A small candle inside the previous large one shows compression. Trade the break of the mother bar.

An inside bar has a high and low fully within the previous bar, called the mother bar. It means volatility has contracted.

A break above the mother bar high or below its low often starts the next move. In an uptrend you favour the break upward.

Larger mother bars and inside bars at key levels give clearer setups.

Find a large bar followed by a smaller bar completely inside it.
Check the higher timeframe trend.
Place pending orders above the mother high and below the low, or only in the trend direction.
Cancel the other order once one triggers.

Entry: On a break of the mother bar high (long) or low (short), in the trend direction.
Stop loss: On the opposite side of the mother bar, or at the inside bar extreme for a tighter stop.
Target: At least 2R or the next level.

Wrong: Trading tiny inside bars where the stop is too small. Right: Use meaningful ranges so spread does not dominate.
Wrong: Trading against the higher timeframe trend. Right: Prefer breaks in the trend direction.

Pro tip: Inside bars that form right after a strong trend leg often act as a flag and continue.

An inside bar has a range: Answer: Fully within the previous bar. It is contained inside the mother bar.
Which direction should you favour? Answer: With the higher timeframe trend. Trade with the trend.
A big benefit of inside bars is: Answer: A tight, defined stop. The structure gives a clear stop level.

Educational content, not financial advice. Diagrams are illustrations, not real market data.