The psychology behind inside bars is compression: after a strong directional move, buyers and sellers reach a temporary standoff while the market stores energy for the next expansion. It reflects the psychology of the market: after a strong move, participants hesitate, traders take profits, institutions pause, and momentum slows; this contraction in price action shows that the market is preparing for a new phase.
Big players use inside bars for position building because while retail traders get impatient and exit during the consolidation phase, institutions quietly accumulate massive positions, knowing the compression will eventually release.