INSIDE BAR

INSIDE BAR

What does it look like?

An inside bar must stay completely within the range of the bar immediately before it. In other words, the second bar must have a lower high and a higher low.

What does it mean?

An inside bar is a contraction in price range/volatility. Within the same unit time, the market covers less ground and stays completely within the range of the previous bar.

It is a pause in price action and does not show clear strength in either direction.

How do we trade it?

1. Place bracket orders around it to trade its breakout in either direction. (A buy stop order above its high, and a sell stop order below its low. Once one order is triggered, cancel the other.)
2. Place only one order (buy or sell) according to the market trend.
3. Wait for a breakout of the inside bar and trade its failure.