Inside Bars

I have read that a lot of people look for inside bars to take trades. The theory is that it is a sign of exhaustion and that prices are about to turn. The rules for an inside bar are very simple, the high and low must be contained within the previous bar. In other words it has to fit inside the previous bar.

On the attached screenshot you will see that we had an inside bar this morning on the 1 hour chart which worked. Inside bars themselves do not provide a stoploss level, my stoploss on an inside bar would be 1 tick above the swing high/low which may be quite a big SL on occassions.