Price action, stripped down
Much of what gets taught as candlestick patterns has a simpler modern equivalent. Instead of memorising named shapes, you can describe almost any bar with three relationships:
- Pin bar — a long wick on one side and a small body at the other end. Price was pushed one way and rejected. It is the same geometry as a hammer or a shooting star, with the location requirement made explicit rather than baked into the name.
- Inside bar — the bar's entire high-to-low range sits inside the previous bar's range. Compression: the market went quiet.
- Outside bar — the bar's range completely contains the previous bar's range, in both directions. Expansion: volatility increased and one side won.
Why this framing is more useful than pattern names
Because every one of these is defined by a measurement you can check mechanically, and each one maps directly onto a decision:
- Pin bar tells you a level was defended. Trade it in the direction of the rejection, with a stop beyond the wick — the wick's extreme is a natural invalidation point.
- Inside bar tells you the market is coiling. Breakouts from compression are often sharp, so the trade is usually a break of the mother bar's high or low, not a guess at direction.
- Outside bar tells you volatility expanded and one side won. It frequently marks the start of a move — or, at the end of one, exhaustion. Location decides which.
The same three rules apply
None of these escapes the context requirement. A pin bar at a level you marked in advance is a trade; a pin bar in the middle of a range is decoration. An inside bar after a strong trend is a continuation setup; an inside bar in chop is just a quiet bar. The vocabulary changed; the discipline did not.
How to check this yourself
Pick one session and label every bar as pin, inside, outside, or none — most will be "none", which is itself worth noticing. Then mark where the market actually moved. You will usually find the moves started from inside-bar breaks or outside bars, and that most pin bars did nothing. That ratio is the honest base rate, and knowing it is what separates a plan from a hope.