Inside Bar and Outside Bar

Inside bar: entire range of the second candle fits within the first candle's high and low. It represents contraction — the market preparing for a move. Mother bar defines the breakout boundaries.

Outside bar (engulfing of range): second candle's high exceeds first high AND low is below first low — expansion and volatility takeover. The close direction of the outside bar hints at who won the battle.

Inside bar strategy: place conditional orders or manual alerts at mother bar high/low, enter on break in the direction of HTF bias, stop on opposite side of mother bar. False breaks are common — require close, not wick.

Outside bar at key level can signal violent rejection or breakout absorption. A bullish close outside bar from support after a sweep is a strong long signal. A bearish close outside bar from resistance supports shorts.

Multiple inside bars stacked (inside-inside) tighten compression — breakout often follows with expanded range. Patience is required; do not guess direction early.