What directional movement is recorded on an inside day?

An inside day occurs in technical analysis when the price range of a current trading day is completely contained within the price range of the previous trading day. This formation indicates a period of indecision in the market, where neither buyers nor sellers were able to gain control, resulting in a neutral or non-directional movement.

In the context of directional movement, the concept refers to the change in price direction from one period to the next. Since the current day's high is lower than the previous day’s high and the current day's low is higher than the previous day’s low, the overall net movement of price does not indicate a clear direction. Therefore, an inside day would be categorized as having no directional movement.

Understanding this concept is crucial because it can affect trading strategies. Traders may interpret an inside day as a consolidation pattern, anticipating that a breakout in either direction may follow, making this day pivotal in their decision-making process.