What it looks like
A bigger candle (the mother bar), then an inside bar whose high and low, wicks included, both sit within the mother bar's range. Later a candle closes below the mother bar's low. A wick through the low does not count; the body has to close beyond it.
What it means
The inside bar is a pause where neither side could get beyond the last candle. When a candle closes below the mother bar, sellers have won that squeeze. Stops from buyers who bought the pause sit below the mother bar, so the break can speed up as those are hit. It means most in a downtrend or after a bounce into resistance, where the pause is a rest before the next leg down.
How to trade it
- 1
Mark the high and low of the mother bar once the inside bar has closed.
- 2
Confirmation: a candle closes below the mother bar's low.
- 3
Entry: sell at that close.
- 4
Stop: above the high of the mother bar. Example on gold: mother bar 4,032 to 4,018 (14 points), close below at 4,016. Sell at 4,016, stop at 4,034, an 18 point risk.
- 5
Target: at least the mother bar's height from the break, so about 4,004, or further if the next support is lower.
A close back inside the mother bar's range after the breakdown candle has closed.
Where it works best
On the 1 hour to daily charts in a market that is already falling, especially when the inside bar forms just under a resistance level.
WickSpeak spots inside bar breakdowns automatically and labels them on the candles that made them. The note says what the pattern is, how to trade it and that a close back inside the bigger candle proves it wrong. In Playbook you can use it as a condition in a play, alone or alongside other patterns and indicators (any of the 146 patterns can be a condition), and backtest it on past candles with your own costs.
Common mistakes
- Selling a wick below the low before any candle has closed there.
- Taking the trade when the mother bar is so large that the stop dwarfs the target.
- Selling into a major support level just below the break, which leaves no room to reach the target.
Related patterns
Questions traders ask
Is an inside bar bullish or bearish?
On its own an inside bar is neither: it is a pause. The direction comes from which side of the mother bar price closes on next. A close below the low makes it a bearish breakout.
Where is the stop on a bearish inside bar?
The standard stop is above the high of the mother bar. A tighter stop above the inside bar's high is possible but gets hit by normal noise more often.
How far can an inside bar breakout run?
A common first target is the height of the mother bar, measured from the break. Beyond that, use the next support level, since the pattern itself gives no further guide.
Can I trade inside bars on US30?
Yes. Indices like US30 form clean inside bars on the 1 hour and 4 hour charts, especially around the US open. Allow for spread when placing the stop above the mother bar.