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Market Intelligence › Basic Terminologies
The simplest visual signal of compression and expansion
Published by The Retail Trader · JUL 22, 2026 · Price Action
The relationship between two candles says more than a single candle. Inside and outside bars are exactly that relationship — one says the range is shrinking, the other that it has burst open.
An inside bar is a candle whose entire high-low lies inside the previous candle's high-low. It means there was less disagreement in that session than in the previous one — the range has contracted.
An outside bar is the opposite — its high is above the previous one and its low is below. Here people on both sides were active and the range expanded.
These four points are practical:
• An inside bar does not show direction by itself — it only shows compression.
• Expansion coming after compression is common, but its direction is not given by the inside bar.
• Two or three inside bars in a row strengthen the compression further.
• An outside bar is often the first sign of rising volatility, not of a trend.
These patterns matter more on a higher timeframe. On a one-minute chart every second candle is an inside bar — there it is not information, only noise.
This article is for education only — it is not a buy or sell recommendation, makes no claim of guaranteed returns, and is not advisory. Rules, rates and mechanics are changed from time to time by the exchanges, SEBI and RBI, so verify every number yourself with your broker or an official source.