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, with 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.