An inside bar is a candlestick whose high is lower than the prior candle’s high and whose low is higher than the prior candle’s low — its entire range is contained within the previous bar, the “mother bar.” It represents a contraction in range, a pause where the market consolidates inside the prior period’s extremes.
Traders use inside bars two ways. As a continuation setup, a break of the mother bar’s high or low in the trend direction is taken as the consolidation resolving onward. As a volatility cue, clusters of inside bars mark coiling ranges that often precede an expansion — the breakout being the tradable event, not the inside bar itself.
The pattern is fully mechanical — containment is an exact high/low comparison — which makes it one of the cleaner candlestick concepts to test. Secuora’s AI backtester includes an inside-bar primitive, so a plain-English rule like “buy a break above the mother bar after an inside bar” compiles to a deterministic, repeatable definition.