The Inside Bar is a two-candle pattern where the second candle's high and low are completely within the high and low of the first candle (the "mother bar"). It signals a pause or consolidation in the market — the market is "coiling" before its next significant move.
Inside Bar Structure
Inside Bar Breakout Strategy
Bullish Breakout:
Entry: Buy when price breaks above the Mother Bar high
Stop Loss: Below the Inside Bar low
Target: 1.5× to 2× the Mother Bar range
Bearish Breakout:
Entry: Short when price breaks below the Mother Bar low
Stop Loss: Above the Inside Bar high
Target: 1.5× to 2× the Mother Bar range below entry
Entry: Buy when price breaks above the Mother Bar high
Stop Loss: Below the Inside Bar low
Target: 1.5× to 2× the Mother Bar range
Bearish Breakout:
Entry: Short when price breaks below the Mother Bar low
Stop Loss: Above the Inside Bar high
Target: 1.5× to 2× the Mother Bar range below entry
Inside Bar in Trend vs Reversal
| Context | Meaning | Trade |
|---|---|---|
| After strong trend candle | Pause before continuation | Trade breakout in trend direction |
| At major support/resistance | Indecision before reversal | Trade breakout in reversal direction |
| Multiple inside bars in a row | Tight consolidation — big move coming | Wait for breakout with volume |
Inside Bars on NSE stocks after a gap-up or gap-down open are extremely reliable continuation signals. The gap shows conviction. The Inside Bar shows the market is digesting the move. The breakout confirms the next leg in the gap direction.
