Technical Definition
A two-candle price action pattern where the second candle is completely contained within the range of the previous candle, signaling volatility contraction and a potential breakout.
Core Mechanic
The market pauses, volatility contracts, and energy builds for the next move.
Expert Insight
Momentum pauses.
NatureNeutral (context-driven)
Market BiasNone (determined by breakout)
FamilyTwo-Candlestick Pattern
Market Psychology
Before the Pattern
Action
Market may be trending or ranging Volatility may have recently expanded
01
Mother Bar
Range
One side shows strength Price moves decisively within the session
02
Inside Bar
Pause
Both sides pause Participation reduces Traders wait for confirmation Volatility contracts
03
Pattern Anatomy
Pattern Blueprint
1
Mother Bar (1st Candle)
Establishes the reference range.
2
Inside Bar (2nd Candle)
High is lower than Mother High, Low is higher than Mother Low.
3
Contraction
Entire candle fits inside the prior range, showing reduced participation.
"Volatility contracts sharply as the market pauses within the previous session’s range."
Pattern Rules
Identification Guide
1
Pattern consists of two candles
Comparison.
2
Second candle’s high < first candle’s high
Lower High.
3
Second candle’s low > first candle’s low
Higher Low.
4
No overlap outside the Mother Bar range
Containment.
Signal Confirmation
- Breakout above the Mother Bar high (bullish)
- Breakdown below the Mother Bar low (bearish)
- Strong close outside the range
- Expansion in volume/range after the break