3 Proven Inside Bar Trading strategies you need to be profitable in Forex

The bullish variant consists of a strong bearish bar followed by a bullish bar. A bearish exhaustion bar opens with a gap up before moving down to close as a bearish bar. Now let’s analyze how traders can manage entries and exits while using this specific strategy. As mentioned earlier, InSide Bars can vary in terms of size, and can also vary in range, color, etc. Here are a few types of bars that you will most likely use when utilizing the InSide Bar Strategy.

An inside bar is considered bullish when it serves as either a continuation pattern during an uptrend or a reversal pattern during a downtrend. We will discuss this further and provide an example in the following sections. This formation indicates a period of market consolidation or indecision but does not necessarily signal a trend reversal.

1. These levels are rarely exact, and it is more practical to consider them zones instead.
2. For the bullish pattern, the market found support below the low of the previous bar.
3. The inside candle pattern occurs when the high and low of a candle are contained within the range of the preceding candlestick, indicating consolidation or indecision in the market.
4. The overall market situation and previous price movements are crucial.
5. Market-bulls.com does not accept responsibility for any loss or damage arising from reliance on the site’s content.
6. An inside bar is a candlestick pattern where the high and low of a candlestick are within the high and low range of the preceding candlestick.
7. The chart on the right is a 15-minute footprint, showing how the bullish breakout at the 53,200 level unfolded.

Example #1: Uptrend Inside Bar Setup – Bullish Inside Bar Pattern

1. This trial allows you to explore the benefits of higher-tier plans and make a well-informed decision about purchasing.
2. This strategy is composed of a fakey setup, and it has a higher winning ratio if it is traded with the trend.
3. This is because market context is incomplete without considering the accompanying volume and the market structure in which the setup appears.
4. If the previous candle was a higher low and high, I am looking for a bearish trade and will place a sell-stop order below the low of the Inside Bar.
5. A clear rejection of a downward thrust is a bullish reversal, and a clear rejection of an upthrust is a bearish reversal.

The Inside Bar Pattern is one of the most significant candlestick patterns used in technical analysis. The pattern has stood the test of time across many markets—Forex, stocks, indexes, and cryptocurrencies. The Inside Bar pattern provides the most reliable signals when traded on a medium-term chart like a daily chart. This is recommended because, on a medium-term chart, Inside Bars have a larger sample size and occur only at the actual levels where the market can actually reverse.

The inside bars in the chart above formed on the GBPJPY daily chart in a choppy market. This sideways price action represents consolidation, which is what you want to avoid when evaluating an inside bar setup. First and foremost, the time frame you use to trade inside bars is extremely important. As a general rule, any time frame less than the daily should be avoided with this strategy.

Traders could also wait for the candle to close, but this comes with the risk of missing a big move in the market. Our suggestion would be to find whichever method works best for you. The moving average is one of the most straightforward tools for determining the direction of the trend. If the inside bar setup takes place above the moving average, then we’ll anticipate a bullish breakout as the market has been in a bullish trend. The inside bar strategy 2 is composed of a trendline breakout and an inside bar breakout.

What is the Best Time Frame to Trade Inside Bars?

By doing this, traders can make better decisions, improve their performance, and reduce losses. It’s a bar that fits completely inside the high and low of the previous bar, known as the “mother bar.” This shows a pause and a possible breakout in the market. 2) The inside pin bar combo setup is simply a pin bar that’s also an inside bar. In other words, a pin bar that’s within the range of an outside bar or mother bar. Pin bar and inside bar combination patterns are some of the most potent price action signals inside bar trading strategy you will encounter. There are two main ‘combo patterns’ you should focus on learning.

But before we do that, let’s first take a look at how an inside bar forms and what the pattern represents. Some traders use a more lenient definition of an inside bar that allows for the highs of the inside bar and the mother bar to be equal, or for the lows of both bars to be equal. However, if you have two bars with the same high and low, it’s generally not considered an inside bar by most traders. Bar patterns represent just one aspect of a price-based trading plan. As the lower volatility comes within the context of seven bars, instead of a single bar like in the case of an inside bar, the NR7 pattern is a stronger sign of decreasing volatility.

This is a pure price action strategy, and it has a higher winning rate. This is a 30 minute chart and you can see price is basing under a previous high. To me, the basing is important as it shows that the sellers have not been able to drive price back down when we are in an uptrend. Each high or low of a candlestick represents, at least in the short term, an area of support or resistance. If you agree with that saying, then a multiple number of inside bars should bring a bigger break. While that may be true, we are going to focus on the 2 inside bar candlestick pattern and remember, depending on the timeframe, they may have more meaning.

Trading Tools

The accuracy of the Inside Bar pattern is influenced by the size of the Inside Bar relative to the Mother Bar. A smaller Inside Bar within the range of the Mother Bar generally indicates a higher probability of an accurate signal. Ideally, the Inside Bar should form within the upper or lower half of the Mother Bar. Avoid mistakes like not recognizing the pattern correctly, ignoring the big picture, over-trading, and not managing risk well. Good analysis and following tested trading rules can help avoid these errors.

Inside bars work well in different market conditions and timeframes, whether you are trading trends or looking for reversals. The Inside and Outside Bars can be used in Scanning the market. To see how exactly they can be used in these ways, we provide the following samples.

This enables traders to place short orders during an existing uptrend and long orders during an existing downtrend. Find the existing trend using the technical indicators or price action analysis. Locate a candlestick that is completely engulfed by the preceding candle’s high and low. If the preceding bar is a red candlestick, the Inside Bar will be a green candlestick, and if the preceding bar is a green candlestick., the Inside Bar will be a red candlestick. Market Context – The inside bar is a neutral pattern that can occur in any market trend (uptrend, downtrend, or even sideways). It must then be followed by a third candle that serves as a confirmation candle to indicate the likely direction moving forward.