Inside Bar is a Client Side VTL indicator to identify Inside Bars in chart and marks the them on chart by a down arrow above the Inside Bar and an up arrow below the Inside Bar. The inside bar is a two candle price action setup. The Inside Bar is defined as a candle whose high is less than the high of prior bar and low is greater than the prior bar. It is a bar that is completely contained within the range of the preceding bar, also known as the “mother bar”. An inside bar formed on a Daily chart will sometimes look like a triangle pattern on lower timeframes such as one-hour chart. An inside bar indicates a time of indecision or consolidation. Inside bars typically occur as a market consolidates after making a large directional move, they can also occur at turning points in a market and at key decision points like major support/resistance levels. Thus inside bars represent breakout trading opportunities. Traders usually open trades on the breakout of the mother bar. Another method is to open trades on breakout of the inside bar itself.
There are basically two ways to trade an inside bar setup: As a continuation signal or as a reversal signal. The image illustrates these setups. When an inside bar is formed in an uptrend, it is a temporary pause of the uptrend. So upward breakout of the mother bar is likely to present a good trading opportunity. In a down trend, downward breakout of the mother bar presents a good sell opportunity. At key support/Resistance levels, the Inside Bar setup will act as a trend reversal setup. Traders should use discretion in picking inside bars for trading. Inside bars formed inside a trading range is not good for breakout trades as the consolidation will continue till price break out from the trading range.