Candlestick PatternsBeginner

Inside Bar and Outside Bar

What inside bars and outside bars are, how the mother bar defines a breakout range, and how traders use them for compression and expansion setups.

Library categories

What it means

An inside bar is a candle whose high and low are both within the previous candle's range (the mother bar). An outside bar is the opposite: its high and low both exceed the previous candle's.

Several inside bars in a row show compression.

Why traders use it

Inside bars show the market pausing; a break of the mother bar's range often starts the next move. Outside bars show expansion: both sides were tested in one candle and one side won.

Chart examples

Inside bars and the mother-bar breakout

InsideInsideBreakoutMother bar range
Two candles stay inside the mother bar's range; the close above its high starts the next leg.

Outside bar

Previous barOutside barCovers the whole previous range
The candle trades below and above the previous candle's range and closes strongly up.Schematic diagrams drawn to explain the idea; they are not market data.

How to identify it objectively

  • 1Inside bar: high < mother high and low > mother low.
  • 2Outside bar: high > previous high and low < previous low.
  • 3Mark the mother bar's high and low as the breakout range.
  • 4Trade a close beyond that range.

Bullish use

  • 1Inside bar(s) after an up move.
  • 2Close above the mother bar's high.
  • 3Stop below the mother bar's low or midpoint.

Bearish use

  • 1Inside bar(s) after a down move.
  • 2Close below the mother bar's low.
  • 3Stop above the mother bar's high or midpoint.

What confirms it

  • Breakout in the trend direction.
  • Breakout candle with a strong body.

What invalidates it

  • A break one way followed by a close back inside and a break the other way.

How a hypothetical setup is built

Entry

On a close beyond the mother bar.

Stop

Mother bar midpoint or opposite side.

Target

1–2× the mother bar range.

A hypothetical illustration of how the concept is turned into a plan, not a recommendation. Practise it on a paper account first.

Historical testing

Not tested on The Tradeskill. Inside-bar breakouts are easy to define precisely, so they are well suited to testing in replay.

Limitations: when it fails

  • False breaks of the mother bar are common.
  • A large mother bar means a large stop.
  • On low timeframes inside bars are everywhere.

Knowledge check

Pick an answer to see the explanation. Nothing is saved.

An inside bar's range is…

1. An inside bar's range is…

The mother bar is…

2. The mother bar is…

An outside bar shows…

3. An outside bar shows…

Practise it risk-free

Open the free chart, use replay to go back in time and look for this concept candle by candle with $20,000 in virtual money.