What is an 'Inside Day'

Inside Day refers to a candlestick pattern that forms after a security has experienced a daily price range equal to that of the prior day.

BREAKING DOWN 'Inside Day'

The inside day is a result of a security trading within the same high and low range of the prior day’s trading. It can be indicative of indecision in the market, leading to the security remaining stagnantly priced. The candlestick pattern performs at its best when it’s showing as a continuation pattern. Especially when viewed during uptrends and downtrends. A harami pattern is more specific form of an inside day candlestick formation and is generally used to identify coming changes in trends.

Although helpful, investors looking to use inside day candlestick patterns for market change predictions should use them in conjunction with other forms of analysis. An ascending triangle chart pattern, paired with an inside day, tells a broader story and indicates more significant changes ahead. The inside day pattern is a common formation and should not be treated as significant without additional analysis.

Investors often use the activities of the prior day to determine their entry point on long and short positions. An inside day may signify to an investor that their strategy should remain the same as the day before.

Example of an Inside Day

Since inside day chart patterns occur frequently, their significance is best determined by combining them with another indicator. For example, consider Fly TTN. Their stock has been trading at an average of $25 for past three days. The daily low has been $22 and the daily high has been $27. This shows on the chart as an inside day, indicating that the prices are stable and the stock for Fly TTN is neither in high demand nor at risk of dropping.

When used in conjunction with the ascending triangle chart pattern, traders can see that although Fly TTN is holding, the stock has been on an upwards trend over the past two months. An investor, believing that this is an indication that the security will continue to rise in value, may choose to purchase shares of the stock.

A trader who is only using the inside day pattern for analysis may opt to pass over Fly TTN, believing that the asset is not moving enough to be profitable. Investors who are particularly risk adverse may be lulled into a false sense of security by just using the inside day pattern, and miss out on opportunities that could net them a large return on their investment.

RELATED TERMS
  1. Rising Bottom

    Rising bottom is a pattern on a security's chart, considered ...
  2. Insider Buying

    Insider buying is the legal purchase of shares by a senior executive ...
  3. Confirmation On A Chart

    Confirmation on a chart is the term used to describe a chart ...
  4. Mat Hold Pattern

    A mat hold pattern is found in the technical analysis of stocks ...
  5. Morning Star

    A morning star is a bullish candlestick pattern in a stock's ...
  6. Insider

    An insider is a director or senior officer of a company, as well ...
Related Articles
  1. Trading

    Can Insiders Help You Make Better Trades?

    Find out why the trading activity of owners and executives can be a valuable trade-confirmation tool.
  2. Investing

    When insiders buy, should investors join them?

    Insider trading activity can inform your investment strategy, but it requires research and a level head. Here's what to look for as insiders buy and sell.
  3. Trading

    Technical Analysis: Triple Tops and Bottoms

    Triple and double tops and bottoms may be tough to spot but can be powerful patterns.
  4. Trading

    Most Commonly Used Forex Chart Patterns

    Greatly improve your forex trading by learning these commonly used forex chart patterns that provide entries, stops and profit targets.
  5. Trading

    Watch For These Chart Pattern Breakouts Right Now

    These stocks are near chart pattern breakout points, indicating potential trend reversals ahead.
  6. Financial Advisor

    Company Insiders Aren’t Buying Stock: Should You?

    Purchases of company stock by insiders is on the decline. Is this a warning sign?
  7. Investing

    How to use insider and institutional ownership

    Learn why insider and institution stock ownership reveal much information about the stock. Understand what to consider when making well-informed investment decisions.
  8. Trading

    Alphabet Stock Set to Rally 20%

    An ascending triangle chart formation suggests potential upside for shares of the tech giant.
  9. Trading

    Bullish Engulfing Candle In An Uptrend

    These four stocks are in uptrends that recently had a bullish engulfing candlestick pattern.
RELATED FAQS
  1. What are the differences between patterns and trends?

    Learn the difference between a pattern and a trend. Explore how technical analysts use patterns and trends to identify trading ... Read Answer >>
  2. What are the differences between a bar chart and candle sticks?

    Explore the difference between bar and candlestick charts. Learn how technical analysts use charts in the analysis of supply ... Read Answer >>
  3. How do traders interpret a Dragonfly Doji pattern?

    Read about a rare but significant candlestick chart pattern: the dragonfly doji. Learn what a dragonfly doji says about a ... Read Answer >>
  4. How do I identify a stock that is under consolidation?

    Discover the three major characteristics stocks or securities exhibit when they are trading under a period of price consolidation. Read Answer >>
Trading Center