Hello and welcome to another edition of the bulls vs the bears. A while back I did a post on Trading The Inside Bar With Gusto. Today I am going to do a complete breakdown of the inside bar and how to trade it. Being the nice guy I thought to myself”Hmmm..How about doing breaking the inside bar down for those who are still struggling trying to trade the the insidd bar?” So basically we will be doing an introductory lesson on trading Inside Bar signals in terms of what it is, its anatomy, and how to trade the signals.
For those of you who are fairly new to the inside bar it’s fairly straight forward. It just shows a pause among among the major players as they try to contemplate their next move. Even more important the inside bar clues you in as to the next move of the major players. Think of the inside bar as another tool in your mastery of your trading strategy. And when you do master the inside bar it will most certainly help you prosper as a forex trader.
I guess the question burning on everybody’s mind is
What Is An Inside Bar?
Well an inside bar is a a pattern consisting of two components called the mother bar and the inside bar respectively. Of course the first bar in the pattern is the mother bar followed by the inside bar. It reminds me of a hen protecting its chicks . Now let’s see what the inside bar looks like in real life.
Ladies and gentlemen this is what the inside bar pattern looks like. Now as you can see the inside bars form in the middle of the mother bars or close to either the high or low of the trend . This pattern takes shape in both the bullish and the bearish trends. It doesnt really matter how these bars look so long as they are within high to low distance of the mother bar.
Now that we have gotten the definition out of the way let’s look at
Four Variations of The Inside Bar.
The first variation we are going to look at is
Double Inside Bar
The double inside bar consists of two bars within the mother bar. Sometimes you can sopt as many as thr33 to four inside bars within the same inside bar layout. when you see this many bars that tells you that the players are struggling to decide what their next move will be. The good news is these bars appear before the powerful trend moves take place. so just hang tight and wait for those moves to unbfold. Then you make your entry.
Next up is
Coiling Inside Bars
Coiling inside bars take shape when two or more inside bars are coiled up within one another. Picture a bicycle spring and how tight it looks. That’s what coiling inside springs look like. They coil up very tight like a spring. When this pattern develops it suggests the market is suffering from contraction. After a while the market will uncoil and burst into a powerful trend surge. Keep your eyes open for these surges as they present great profit opportunities
Next up is
Fakey Inside Bar Pattern
The fakey pattern is what you call an inside bar false break. It’s a false breakout from in inside bar pattern in that an doing a sharp reversal and going back the opposite directions. Rookie traders are the biggest,,casualties in this charade as they are tricked into believing a huge move is about to break. Of course they end up making the wronf move which will end in tears for a lot of them. Then again these false breaks drop valuable clues as to the next move of the markets
Last but not least is
Inside Bar/Pin Bar Combo
The Inside bar – pin bar combo is pretty much self explanatory. It’s a combination of an inside bar and a pin bar. Here you have an inside bar with pin bar showcasing its classic tail/shadow. Now as some of you may well know, the pin bar’s tail/shadow is tells us which direction the market is turning to next. Thus the inside bar doesnt just take a break. It comes with confluence as well. In others it’s equipped with other price factors. This makes it a very humongous price signal.
That’s it with the variations of the inside Bar. The next burning question on everybody’s mind is
How Do I trade Inside Bar Patterns?
You can trade Inside Bar Patterns two ways -either as a continuation signal or as a reversal signal. Now you an trade these patterns as continuation signals in the daily chart or as a reversal signal at key support and resistance levels. The best way to get the most out of inside bars on continuation levels is trading them on the daily charts. Someone is probably wondering”Why the daily charts?” Well, it’s fairly easier. Unlike the the other time frames you get less noise. Everything is crystal clear on the daily chart. Let’s take a look at a few examples shall we?
Trading Inside Bars as Continuation Patterns
As I said The most profitable way of trading an Inside bar is within a trending market or continuation move.
It’s much easier to trade and the trend is so clear that the odds can only be in your favour and nothing else. Often times the inside bar results into a breakout or continuation pattern depending on the current trend at the time. And when that pattern unfolds, it can only mean one thing – PROFITS!
Last but not least is:
Trading Inside Bars As Reversal Patterns
The graphic above is a classic example of a solid inside bar reversal. An inside bar forms at the level of resistance, suggesting a period of indecision among the major players. Obviously they are scared of moving any higher. However, see the bears take over in explosive fashion as they head downwards on the back of a price breakdown past the inside bar’s mother bar low. With that being said, it’s time to ring in the profits.
That’s s wrap for “A Complete Breakdown of Inside Bar and How To Trade It.” Hopefully you ar inspired and rearing to apply your knowledge you have gained about trading the inside bar. Next week we will learn how not to trade the inside bar.
Til next time take care.
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