Apple, Inc (NASDAQ:AAPL) gapped down 0.93% on Friday when the stock ran into a group of sellers who bought the dip and caused the stock to rise to near flat.

Apple had spent the last four trading days consolidating mostly sideways just above the 200-day simple moving average (SMA). The consolidation took place in the form of a quadruple inside bar pattern, which leans bullish.

On Friday, when Apple broke down under Thursday’s low-of-day, the stock didn’t receive bearish momentum and remained trading within the Feb. 3 mother bar.

An inside bar pattern indicates a period of consolidation and is usually followed by a continuation move in the direction of the current trend.

An inside bar pattern has more validity on larger time frames (four-hour chart or larger). The pattern has a minimum of two candlesticks and consists of a mother bar (the first candlestick in the pattern) followed by one or more subsequent candles. The subsequent candle(s) must be completely inside the range of the mother bar and each is called an "inside bar."

A double, or triple inside bar can be more powerful than a single inside bar. After the break of an inside bar pattern, traders want to watch for high volume for confirmation the pattern was recognized.

• Bullish traders will want to search for inside bar patterns on stocks that are in an uptrend. Some traders may take a position during the inside bar prior to the break while other aggressive traders will take a position after the break of the pattern.
• For bearish traders, finding an inside bar pattern on a stock that's in a downtrend will be key. Like bullish traders, bears have two options of where to take a position to play the break of the pattern. For bearish traders, the pattern is invalidated if the stock rises above the highest range of the mother candle.

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The Apple Chart: Apple reversed into an uptrend on Jan. 6 and has made a consistent series of higher highs and higher lows. The stock’s most recent higher high was formed on Feb. 3 at $153.10 and the most recent confirmed higher low was printed at the $141.32 mark on Feb. 1.

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Photo: pio3 via Shutterstock