Technical AnalysisIntermediate

Inside and Outside Bars

An inside bar's whole range sits within the previous candle's range, showing contraction; an outside bar's range covers the previous candle entirely, showing expansion.

An inside bar sits entirely within the previous bar's high-to-low range, showing a pause or contraction. An outside bar covers the whole previous range, showing expansion. Both are judged by the full range including wicks, not just the bodies, and both are usually read together with trend and nearby levels.

Category
Technical Analysis
Reading time
3 min
Also called
Inside bar, Outside bar, Mother bar
Updated

Inside and outside bars in plain words

An inside bar is a candle whose whole range sits within the high and low of the candle before it, called the mother bar.1

It only has to fit inside the mother bar's full range, wicks included — not just its body.1

An outside bar is the reverse: it reaches above the previous candle's high and below its low.2

How to read them

  1. Mark the prior bar

    Note its high and low.

  2. Compare the next bar

    Inside: within the range. Outside: beyond both ends.

  3. Use the full range

    Include wicks, not just the body.1

  4. Plan an inside-bar breakout

    Place entry orders on both sides of the mother bar: a buy stop over its high, a sell stop beneath its low.1

  5. Read an outside bar's close

    Close near the high is bullish; near the low, bearish.2

  6. Check context

    Prefer strong mother bars and higher timeframes.

Worked examples

Example 1 — Inside bar

Contraction

Hypothetical: bar 1 range 100–110; bar 2 range 103–108.

Example 1 — Inside bar — calculation
Mother100–110
Inside103–108

The whole second candle sits within the mother bar's range — an inside bar.1

Example 2 — Breakout

Upside break

A later hypothetical bar trades to 111, above the mother high.

Example 2 — Breakout — calculation
Breakout111

With stops above the high and below the low, the side that breaks first is entered.1

Example 3 — Outside bar

Bearish outside bar

Hypothetical: bar 1 range 50–55; bar 2 range 48–57, closing at 48.5.

Example 3 — Outside bar — calculation
Range48–57
CloseNear low

An outside bar closing close to its low is read as bearish.2

Inside vs outside bar

AspectInside barOutside bar
RangeWithin prior barBeyond prior bar
ShowsContractionExpansion
Typical readBreakout setupRead the close
Judged byFull rangeFull range

Where traders use them

Advantages and disadvantages

Advantages

  • Clear, rule-based definitions.
  • Give defined entry and stop levels.
  • Work on any market.
  • Show contraction and expansion.

Disadvantages

  • Many false breakouts.
  • Too common on low timeframes.
  • Wide outside bars mean wide stops.
  • Need context to mean much.

Going deeper

Read as far as you need. Each level builds on the one before it.

Full range

Beginner

Wicks count: the inside bar must fit within the mother bar's full high-to-low range.1

Reliability

Intermediate

The pattern tends to be more reliable after a strong directional mother bar and on daily or longer charts.1

Outside reversal

Advanced

An engulfing candle resembles an outside bar, but it only has to cover the previous body (open and close), not the full range.3

Common mistakes

  1. Using only bodies

    Use the full range.

  2. Trading every inside bar

    Filter by context.

  3. Ignoring the outside bar's close

    The close carries the meaning.

  4. Stops too tight

    Use the mother bar's range.

Check your understanding

Test yourself before moving on. Each answer comes with an explanation.

Q1Bar 2 has a higher high and lower low than bar 1. It is…
Q2An inside bar is judged by…

Key points to remember

  1. Inside bars sit within the prior range.
  2. Outside bars exceed both ends.
  3. Use full ranges, not bodies.
  4. Inside bars set up breakouts.
  5. An outside bar's close gives its bias.

Frequently asked questions

What is a mother bar?

The bar before an inside bar.

Is an outside bar the same as engulfing?

Not quite; engulfing uses bodies, outside bars use full ranges.

Best timeframe?

Daily and above are often preferred.

Further learning

Sources

This article is written in our own words. The sources below support the specific facts, rules and figures marked with a number in the text. Links open the original publisher’s page.

  1. IG. 16 Candlestick Patterns Every Trader Should Know (opens in a new tab) Checked .
  2. FXAcademy. Important Candlestick Types - Part 1 (opens in a new tab) Checked .
  3. StockCharts ChartSchool. Candlestick Bullish Reversal Patterns (opens in a new tab) Checked .

Educational content, not financial advice. Examples use hypothetical prices and simplified costs; actual fees, margin rules and regulations vary by broker, market and country. We are not affiliated with any publisher linked above. Last reviewed . Report an error or request a source credit.