What is the Hidden Inside Bar Pattern and how to use this pattern properly ?

[Morris]

Hi, I was looking into candlestick patterns and came across the Hidden Inside Bar pattern. Can you explain what it is and how it can be used to identify potential trading opportunities?

[Rafay]

The inside bar candlestick pattern is made up of two candlesticks. The first candle or the larger candle is known as the mother candle and the second or smaller candle will be formed inside the range of the mother candlestick. This means that the high and low of the second candle will be inside low and high of the mother candlestick. The main thing is to get a good grasp on the concept of what is actually going on in the market when a inside bar candlestick pattern is formed on the chart. Once you get a good grip on this concept then you will not have to stick to available timeframes on the MT4 and it is also very essential in understanding the psychology of the better if you want a better technical analysis.

When the inside bar candlestick pattern is formed on the chart it means that price is indecisive and it is looking for a direction to move in so it is consolidating until the institutional traders make a decision to move in which direction. The price move in a narrow range, squeezing more and more into a narrow straight line until a breakout happens. When the breakout happens it shows the direction decided by the price. This was the actual psychology behind the formation of an inside bar. The concept of Hidden Inside Bar means that you don't need to keep an eye on different timeframes to know when the inside bar is formed. for example if the chart is showing a Inside Bar Pattern on a chart of 15 minute timeframe indicates that there must be an inside bar candlestick formed on the larger timeframes such as 5 hour or 6 hour. so just by looking at the Inside Bar Pattern formed on the 15 minute timeframe you have deduced the formation on inside bar candlestick on the larger timeframe that is why this is called hidden inside bar.

There are many ways to use the inside bar pattern not only when the price breakout from the structure because there are alot of fake breakouts to trap the traders so we should not only trade based on the breakout of the price and we can use this to our benefit.

We can increase the Risk Reward ratio by increasing the Take profit level and reducing the Stop-loss level.
We can also combine the inside bar with confluences to increase out chances of a profitable trade.