The double inside bar is a variation of the inside bar candle. This candlestick pattern will be very effective in the right setting. However, using this model is also a bit complicated.

The double inside bar candlestick pattern indicates that the market is in tension there, and a break out of this tension is an attractive opportunity for many traders. Because trades with these candlestick patterns provide a very good RR ratio. The figure below shows the double inside bar candlestick pattern:

A double inside bar candle has the first candle (called the parent candle) and two candles are in the price area of the previous candle (called the inside candle). It can be seen that the triangle pattern on the low timeframe is likely to be the double inside bar candle on the higher timeframe.

Guide to trading with double inside bar candlestick pattern

4 principles to note:
  • Avoid trading of double inside bars in congested areas or push-pull zones
  • Focus on the closing price to assess breakout signal
  • Respect the main trend
  • A false break is a more reliable signal, but sometimes you'll have to accept a few loss orders
Now let's go into trading examples with this candlestick pattern.

Example 1: Breakout

See the picture below:

  1. Confirm the scene is in an uptrend.
  2. The double inside bar candle appears, placing the buy stop above the highest price of the parent candle (first candle).
  3. Place stop loss below the low of the parent candle. The next candlestick that is matched, we keep, not match, we cancel.
  4. You can also use any of the inside bar's lowest prices to set your stop loss.
Example 2: Trend reversal failed break

You see the picture below:

  1. Strong downtrend.
  2. The market formed a double inside bar candlestick pattern at the end of the trend.
  3. A breakout of the double inside bar candlestick pattern shows that the price is going against the downtrend without any supportive factors.
  4. After the bullish candle broke out of the double inside bar candlestick pattern, the market went flat with 5 overlapping candles.
  5. At the top, the double inside bar appears again.
  6. Breaking the pattern inside the double bar creates a very nice semi-nice setup.
Example 3: Stand outside

See the picture below, notice that this is the inside bar of 3 candles. The 3-candle inside bar pattern provided information that the market is struggling more strongly:

  1. The market is in a sideways range
  2. The 3-candle inside bar pattern formed, but the market context showed that the uncertainty will strongly break out after the pattern is broken.
  3. The bullish breakout candle broke out of the pattern and ended with a long upper candlestick showing strong selling pressure.
  4. Candles with lower candlesticks continually appear, indicating bullish pressure.
The buying and selling pressure appearing in the same trading range is not a good signal for breakout trading. If you meet such a market, you should stay out.

Example 4: Inside bar is double and inside bar 3 candle appears

The 3 inside candles are followed by a double inside bar candlestick pattern. As shown below:

  1. The market starts to decline
  2. Upward pressure appeared with candles with many lower shadows. Along with the quite comfortable trendline, it gives us doubts about the trend.
  3. However, the price reacted to the downtrend line, showing that it is managing to keep the price going. The market outlook continues to decline.
  4. The pattern inside the bar 3 candles formed.
  5. The price breaks the parent candle of the 3-candle inside the bar, at the same time, the double inside bar pattern is formed.
  6. This candlestick breakout is a confirmation of the direction of the market. This is a semi-reliable setup that reinforces the previously formed 3-candle inside bar pattern.
In addition to these cases, in practice, there are many other cases where we should flexibly use the double inside bar candlestick pattern for trading. Note that the context is very important for this model.