Inside Bar
A candle whose entire high-to-low range is contained within the prior candle's range — consolidation and a potential breakout setup.
An Inside Bar forms when the current candle's high is lower than the prior high and the current candle's low is higher than the prior low — the entire bar is "inside" the prior bar's range. It represents a pause in price action: volatility compressed after a directional move.
Inside Bars are often used as breakout setups. Traders watch for price to break above or below the inside bar's range; a break in the direction of the prior trend signals continuation, while a break against it may signal reversal. False breakouts are common in choppy markets.
On the desk
After a strong bullish candle breaks a key resistance level, the next day forms an Inside Bar — the market is digesting the move. A bullish trader sets a buy-stop above the Inside Bar's high, expecting continuation.