In forex trading, an inside bar is a common price action pattern that occurs when the high and low of a candlestick or bar is within the high and low of the previous candlestick. Visually, it appears as a smaller candlestick contained within the range of the preceding candlestick. This formation suggests a period of consolidation or indecision in the market.

Inside bars are significant because they often precede significant market moves. Traders interpret them as a sign of potential impending volatility or a breakout, as the market temporarily pauses before deciding on its next direction. However, inside bars alone do not provide a clear indication of which direction the market will move; additional analysis and confirmation from other technical indicators are typically required.

Traders commonly use inside bars as part of their trading strategies, such as breakout or trend continuation strategies. Some traders wait for the market to break out of the inside bar's range before entering a trade, while others may wait for a confirmation signal from other technical indicators.

Overall, inside bars are a valuable tool in forex trading, signaling potential shifts in market sentiment and providing opportunities for traders to capitalize on emerging trends or reversals.