Inside Bar

An inside bar is a bar which is completely within the range of the preceding bar, i.e. it has a higher low and lower high than the bar immediately before it. An inside bar indicates a time of indecision or consolidation. On a smaller time frame it will look like a triangle. Inside bars often occur at tops and bottoms, in continuation flags, and at key decision points like major support/resistance levels and consolidation breakouts. They often provide a low-risk place to enter a trade or a logical exit point. In the graphic the yellow bars are inside bars (S&P500 futures 5-minute bars). If you notice, one of the yellow bars does not have a higher low than the previous bar as in the definition above. Some traders use a more lenient definition of inside bars to include equal bars.