Inside Bar

The inside bar's range is completely inside the previous candle's range (include the wicks)!

In other words, the candle's high is lower than the previous candle's high, and the candle's low is higher than the previous candle's low.

This candlestick is especially powerful, as it can be actionable for both continuation and reversal. You need to wait for the following candle to confirm the direction.

You can use other factors to influence or confirm a directional bias. In this example:

• Two candles prior, we have a massive hammer candle.
• The candle following the hammer retraces and holds the hammer's midpoint.
• Finally, confirmation after the inside bar: a gap up and retest of the previous day's high.