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There are the following three inside bar trading strategies explained.
I will recommend you go through the previous article on the inside bar patterns to learn these inside bar strategies effectively.
A good inside bar pattern has a large mother candlestick. A large mother candlestick means it has a large body to wick ratio.
There is a complete logic behind it. Big body and small wick represent high market momentum. The smaller body and larger wicks indicate low market momentum. That is why verify the following characteristics of the inside bar pattern before using it in trading strategies.
Now let’s move on to inside bar trading strategies.
It is important to learn the structure of the inside bar pattern. What does it tell the forex traders! It tells the traders that the market is looking for direction. Big institutions and big traders are deciding either to upward or downward.
Remember that whenever the market is moving like a broadening pattern or inward pattern then it is always looking for direction.
This inside bar strategy is based on the fact that price decides its direction from key levels. But if there is an inside bar at the key level then it will make it easy to forecast the direction of the market.
For example, the market will tend to reverse or continue its direction from a resistance level. When the market price reached a resistance level, there it will decide either to break this resistance level or to reverse from this level.
When the inside bar forms at that resistance level, it is a clear indication that the market is deciding its future direction. Breakout of the inside bar pattern confirms the direction of the market. If the price breaks high of the inside bar, then it will continue its trend (it will go up). Price will reverse its trend if it breaks the low of the inside bar.
The main benefit of the inside bar is that it shows a tight stop loss level
This inside bar strategy has been made by the combination of inside bar breakout and support/resistance breakout. This is a pure price action strategy, and it has a higher winning rate.
Components of inside bar strategy 1.
Support and resistance zones represent strong key levels. when price breaks those key levels, it tends to move to the next key level. The Fibonacci tool is a powerful natural tool and I have used it to adjust take profit level.
Follow the following steps of inside bar trading strategy 1.
This is the guide to inside bar and support/resistance trading strategy.
The inside bar strategy 2 is composed of a trendline breakout and an inside bar breakout. A trendline is made up of at least three consecutive bounces of the price that make it a key level. it is also known as inclined support or resistance level.
This strategy consists of the following parameters
formation of inside bar pattern after the breakout of trendline works best and this breakout strategy gives profitable results.
follow the following steps
The trendline and inside bar strategy is easy to spot and it has a high winning probability as compared to support/resistance.
Sometimes, when support and resistance or trendline breaks with a big candlestick then price again come back inward the key level. It represents a fakeout.
This strategy is composed of a fakey setup, and it has a higher winning ratio if it is traded with the trend. For example, trendline and support/resistance breakout represents trend continuation. But sometimes, after the breakout, the price again closes inside the key level. It is a trend reversal setup.
Keep remembering that in this fakey setup you will buy or sell in opposite direction as compared to the two strategies discussed in the above topics.
There are a few steps to follow inside bar trading strategy 3.
A trading strategy consists of many confluences that make a strategy tradeable. Without confluences, you will not be able to make a profit obviously. The inside bar is the best candlestick pattern and I have used price action with the inside bar candlestick and made the best tradeable strategies.
You can modify these strategies too according to your temperament. But keep in mind that confluences are necessary to increase risk reward and winning ratio. These tactics will make you able to profit consistently.
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