An inside bar occurs when a candle's entire high-to-low range sits inside the high-to-low range of the candle before it.
On the left, the current bar's high and low sit entirely inside the prior bar's range. On the right, one wick past the prior high is enough to disqualify it. Bodies and candle color do not matter.
Every candle has two parts:
The Body: The range between the Open and the Close.
The Wicks: The thin lines extending to the High and the Low. These indicate intraday prices that were rejected.
Core Principle
An inside bar is defined strictly by the high and the low. The body (open and close) and the candle color are completely ignored when identifying whether a bar qualifies.
How Inside Bars Are Detected
To scan candlestick patterns across thousands of historical bars, the rules have to be precise and consistent. The system checks two required conditions at the same time.
Qualification Rules
Inside Bar Qualification Rules
Upper Bound: High(t) < High(t−1) [Current high sits below the prior high]
Both have to be true. If the current high matches the prior high, or the current low matches the prior low, the bar does not qualify.
Single vs. Double Inside Bars
A single inside bar is one bar sitting inside the bar before it.
A double inside bar is two in a row: Bar 2 sits inside Bar 1, and Bar 3 sits inside Bar 2. Every double inside bar is also counted as a single.
Bar 2 sits inside Bar 1, and Bar 3 sits inside Bar 2. Every double inside bar is also counted as a single.
How Traders Use It
Bullish continuation
In an uptrend, price pauses inside the prior bar's range. A break above the prior bar's high shows the pause has ended and buyers are stepping back in.
Bearish continuation
In a downtrend, price pauses inside the prior bar's range. A break below the prior bar's low shows the pause has ended and sellers are taking control again.
Risk Management & Trade Mechanics
Entry: The trade can be entered when price breaks the high (for bullish) or low (for bearish) of the prior bar. For a tighter entry, use the high or low of the inside bar itself.
Stop Loss:
Tight stop: Place it on the opposite side of the inside bar.
Standard stop: Place it on the opposite side of the prior bar for more room against normal price swings.
Tool Glossary
The Basics
Candle (OHLC)
One bar of price data: the open, high, low and close. This tool uses the high and the low to measure the range. The open and close are the body, and they do not decide whether a bar qualifies.
Session
One trading day. Time in this tool is measured in sessions rather than calendar days, so weekends and holidays are skipped.
The Patterns
Inside Bar
A candle whose high sits below the prior high and whose low sits above the prior low. The whole range fits inside the bar before it. Color and body do not matter.
Double Inside Bar
Two inside bars back to back. Bar 2 sits inside Bar 1, and Bar 3 sits inside Bar 2. The range narrowed twice in a row.