The inside day, which is a day with a lower high and a higher low than the previous day, is the subject of many analysis and trading techniques because of what it is and what it’s thought to represent.

By definition, an inside day represents a volatility contraction from the previous day — a condition that is often characterized as the calm before a potential market storm (i.e., renewed volatility). This pause gives traders the opportunity to enter the market and catch the next move before it occurs.

If only things were that straightforward.