"Inside bars are a two -bar pattern. They can indicate either a continuation of the existing move or a reversal. A continuation occurs when there is no significant support or resistance level in sight, while a reversal occurs close to a strong sup- port or resistance level... ...A lot of traders are aware of inside bars but few manage to make money with them. Why is this so? It goes back to interpreting price action. A lot of traders look to trade in geometric ways. What I mean is that they search for fancy shapes on a chart and think that this is what represents true price action. This is not the case. A shape is just a shape. The formation by itself means nothing unless underlying order flow backs it up. This is why it’s extremely important that you look for inside bars when a trend is already in place. The best place to look for them is in the beginning of trends."
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