Strategy Library

Price action

Inside bar breakout

An inside bar is a candle whose whole range, wicks included, sits inside the candle before it (the mother bar). It shows a pause. You place orders beyond the mother bar and trade the break, best in a trend or at a level you marked. When the break fails and price snaps back inside, that is the fakey, which some traders trade the other way.

BeginnerForex, indices, gold, cryptoAny sessionH4, D1
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Example 01

Inside bar breakout on a chart

EURUSD · H4Inside bartrend, pause, break

Mother bar: 1.0832 to 1.0868Buy stop: 1.0870Stop: 1.0832Target: 1.0946 (2R)Sample candles, not market data

The rules

Setup
  • An inside bar: its high is at or below the mother bar's high and its low at or above the mother bar's low, wicks included
  • In a trending market, or at a support or resistance level you marked before
Entry
  • Either: a buy stop just above the mother bar (sell stop just below it)
  • Or: a stop order just beyond the inside bar itself, or wait for a candle to close beyond the level
Stop
  • The other side of the mother bar, or of the inside bar if you entered on it
Target
  • The size of the mother bar, the next support or resistance, or 2R and up
Manage
  • Some traders trail the stop once price moves away

Common mistakes

  • Not fully inside. A candle that pokes out of the mother bar is not an inside bar.
  • Trading every one. Inside bars are common. One alone, mid-range, is not enough.
  • Low timeframes. The sources favour 4 hour and daily charts over 1 and 5 minute ones.
  • Right before news. A release can break the bar both ways in a minute.

When it's off

  • Out at your stop
  • A break that comes straight back inside the mother bar has failed (the fakey)

Words to know

Inside bar
A candle whose high and low both stay inside the previous candle's high and low (the mother bar). A body inside the previous body (a harami) is a different test.
Breakout
Price moves through a support, resistance or range edge and a candle body closes beyond it. A wick beyond that closes back inside is a sweep, not a breakout.
False breakout
Price breaks beyond a level but cannot stay there and comes back inside, trapping breakout traders. It is only known after the return, never at the breakout candle's close.
Support and resistance
Zones, not single prices, where buyers (support) or sellers (resistance) have shown up before. A level is broken when a candle closes beyond it, and a broken level is often watched from the other side.
Mother bar
The bigger candle that holds the inside bar.
Fakey
An inside bar break that snaps back inside the mother bar; also called a hikkake.

When you make it yours, I'll ask what the rules above leave open. Start with one of these:

  • Do you place your order beyond the mother bar or the inside bar, and is your stop on the matching side?
  • What is the trend on the timeframe above, and is the bar at a level you marked before?
  • What is the lowest timeframe you trade it on?
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What testing exists

No independent or academic test of inside bar rules was found. The sources present the pattern as needing context, not as reliable on its own.

Before you trust a backtest

  • Many professional traders risk under 1% of their account on one trade idea, and the common guideline is 1 to 2%.
  • The more versions of a rule you try on the same data, the more likely a good backtest is luck. Decide your rules before you test.
  • Include spread and commission, and practice on dates you have not looked at, before you trust a result.

Sources