What is Inside bar?
Ichki sham (inside bar)
In short
A candle whose whole range (high to low) fits inside the previous "mother" candle. A sign of a squeeze; whichever side of the mother bar breaks shows who won.
An inside bar is a candle whose whole range (high to low) fits inside the previous candle's range. The previous, larger candle is called the "mother bar". The inside bar's high is below the mother's high and its low is above the mother's low.
What it means
The market contracted: it didn't leave the boundaries set the day before. This is energy building up — a strong move often follows. The candle itself doesn't say which way; the answer comes from which side of the mother bar breaks.
Trading approach
- With the trend — the most popular approach: in an uptrend, enter on a break above the mother bar's high, stop below the inside bar (or the mother bar).
- You can place stop orders on both sides, but in sideways markets that produces many false breakouts.
How it differs from a harami
A harami looks only at bodies; an inside bar requires the whole range, wicks included — a stricter condition. Several inside bars in a row signal an even tighter squeeze.
Limitation
Inside bars are very common, especially on small timeframes. Most lead nowhere. Context — trend and key levels — is decisive.
A pullback in an uptrend dipped into a support zone: the pin bar's long tail reached $36.60 and was rejected. Inside the next "mother" candle ($37.90–$39.40) a small inside bar formed — a squeeze. Entry when the mother bar's high breaks ($39.50).
Example
Illustrative: a stock in an uptrend. Mother bar: high $45.00, low $41.00 (range $4.00). The next day — an inside bar: high $44.20, low $42.30. Its range sits inside the mother bar.
The trader places a buy stop at $45.10 (just above the mother's high) and a stop-loss just below the inside bar's low, at $42.20:
- Risk: $45.10 − $42.20 = $2.90
- 2R target: $45.10 + 2 × $2.90 = $50.90
If price never reaches $45.10, the order doesn't fill and no position is opened. If price first drops below $41.00, most traders cancel the order.
Mistakes and tips
Trading inside bars in the direction of the trend is usually more reliable than trading against it.
If the mother bar is very large, the stop gets far away; placing the stop below the inside bar and sizing to that is the common fix.
A breakout is confirmed on the close, not intraday; price poking out and returning inside is a false-breakout warning.
Frequently asked questions
- How does the inside bar strategy work?
- You enter on a break of the mother bar's high or low and put the stop on the opposite side. Many traders take only breaks in the direction of the main trend.
- Which timeframe is best for inside bars?
- They are more reliable on daily and weekly charts. On few-minute charts inside bars are very frequent and often just noise.
Learn it in the Academy
This term is covered with hands-on examples and a quiz in these lessons of the interactive course.
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