Inside bar

A two bar formation with a precise test: the second bar's high is at or below the first bar's high and its low is at or above the first bar's low. The first bar is called the mother bar and the pattern says one thing only, that the range contracted. Nothing about closes, colours or bodies enters the definition. Several inside bars in succession are common, and the whole run is measured against the same mother bar.

What it describes is a pause in the expansion of range, which is why it is usually discussed alongside consolidation and volatility contraction rather than alongside reversal shapes. The candlestick literature has a near relative, the harami, and the two are often conflated: a harami compares the bodies of two candles while an inside bar compares their full ranges including wicks, so a bar can be one and not the other. Practitioners disagree about whether an equal high or an equal low should still count, and some require the range to be strictly inside on both sides.

The trap is that the formation is entirely relative to the time frame it is drawn on. A chart of one interval shows an inside bar where a chart of another shows nothing, because the bar boundaries are an arbitrary grid laid over a continuous price. It is also, like every chart pattern, identified after both bars have completed, and evidence on whether such shapes carry information about what follows is contested and depends heavily on how the pattern and its outcome are defined.