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A somewhat common but important price action behavior, and Inside Bar is a candle that is completely inside the previous candles high and low.This is not just referring to the body, but the wicks as well being inside the previous candles price action.Why are inside bars important and how can they lead to trading opportunities.
Before we answer the question above we have to look into the reasons why this price action behavior takes place.There are several reasons for the inside bar forming, many of which we will list below;
- Price is consolidating after a large up/down move in price and is about to start another leg in the same direction
- Price is coming up against a critical support/resistance level