Inside Bar Breakout
Compression before expansion. Coiling candles inside a mother bar, then a decisive break of either side.
What is an Inside Bar?
An inside bar is a candle whose entire range (high and low) is contained inside the range of the previous candle — called the "mother bar." It signals a pause in volatility, a coiling spring, often preceding a decisive breakout in either direction.
Why It Works
Inside bars represent indecision after a directional candle. When one or more inside bars form, traders on both sides place orders just outside the mother bar's high and low. Whichever side breaks first triggers the cluster of stops + breakout orders — the resulting move is usually sharp and sustained.
How to Trade Them
Spot the large mother bar. Watch for small candles contained inside it. Wait for a break of the mother bar's high or low — that's the trigger. If the break is up, hit BUY. If the break is down, hit SELL. Direction of the break tells you which button to use.
Your Mission
Identify the mother bar. Watch the inside bars coil. React to the breakout direction — the chart could go either way. Tight stop at the opposite end of the mother bar = high R:R.