Inside Bar Pattern: What It Is & How to Use It for Crypto Trading

Chart reading is a vital skill for crypto traders, enabling them to make informed trading decisions. One such pattern is the inside bar, which indicates a pause in the market’s trend. Over the next few minutes, we’ll delve into the anatomy of the inside bar chart pattern, how to spot it on candlestick charts and strategies for trading this pattern in crypto markets.

Key Takeaways:

• An inside bar pattern consists of two bars, with the second bar completely covered or engulfed by the first bar, indicating a pause in the market’s trend.

• When trading inside bars, identify the high and low of the mother bar and enter trades in the direction of the breakout, aligning with the larger trend.

• Traders should consider other technical clues, such as trend lines and the larger trend’s direction to enhance the reliability of the inside bar signals.

What Is an Inside Bar?

An inside bar pattern is a two-bar price action pattern in which the second bar is completely engulfed or covered by the first bar of the pattern. The formation gets its name from the second bar, consisting of a smaller range contained within the previous bar, therefore making it “inside.”