SocialForex
Beginner

Inside Bar Pattern - How to Identify and Trade

Inside Bar is a candlestick pattern indicating price consolidation, often signaling a strong breakout. This lesson is for beginners.

Mark · Trader & Founder, Social Forex

Inside Bar Pattern - How to Identify and Trade

What is Inside Bar Pattern?

Inside Bar is a two-candle pattern consisting of a Mother Bar and an Inside Bar. The Inside Bar is completely within the range of the Mother Bar, meaning its high is lower than the Mother Bar's high and its low is higher than the Mother Bar's low. This pattern indicates market consolidation, with buying and selling forces balanced, preparing for a significant move.

CompressionMother BarInside Bar

How to Identify Inside Bar

To identify an Inside Bar, look for:

  • A Mother Bar with a large body (can be bullish or bearish).
  • An Inside Bar that fits entirely within the Mother Bar's range, not exceeding its high or low.
  • The Inside Bar can be bullish, bearish, or a doji.

    • The pattern is clearer when the Inside Bar has a small body and sits in the middle of the Mother Bar.

    How to Trade Inside Bar

    There are two common trading methods:

    1. Breakout trading:

  • Wait for price to break above the Mother Bar's high or below its low.
  • If price breaks above the high, go long.
  • If price breaks below the low, go short.
  • Place stop loss on the opposite side of the Mother Bar.

    • 2. Trend trading:

  • If Inside Bar appears in an uptrend, wait for an upside breakout to buy.
  • If Inside Bar appears in a downtrend, wait for a downside breakout to sell.
    • HighSLMother BarInside BarBreakout

    Real Example

    Suppose you see a currency pair in an uptrend. A strong bullish Mother Bar appears, followed by a small Inside Bar within its range. You wait for price to break above the Mother Bar's high and enter a long trade. Place stop loss below the Mother Bar's low. Profit target could be 1.5 times the height of the Mother Bar.

    Common Mistakes

  • Trading too early: Entering as soon as you see the Inside Bar without waiting for a breakout. This can lead to losses if price moves sideways.
  • Ignoring trend: Inside Bar works best when aligned with the main trend. Trading against the trend can be risky.
  • Stop loss too tight: Place stop loss outside the Mother Bar's range to avoid being stopped out.

    • Practice identifying Inside Bars on charts and combine them with other tools like support/resistance to increase success rate.

    Content is for reference only, not investment advice. Forex trading carries high risk.

    Save your learning progress

    Create an account to keep lessons, watchlist symbols, and journal notes connected as you practice.

    Save progress

    ← Lesson list

    Explore more

    Start hereAcademyResourcesWebinar
    Inside Bar Pattern - How to Identify and Trade · Social Forex