We are talking about the inside bar strategy will name it ”trader strategy”. Inside bar is a price action strategy in which two candles takes part one of them we call mother candle and the inside the range of mother candle we call it inside candle. Mother candle should not have larger shadows up and down.
Inside candle indicates that market is looking for a direction. Think like this, After a bigger move ( Breakout of a level ) Market will be looking for a direction either to continue its direction or a false breakout to capture retailers stop-losses. We will think like this to trade this setup.
The inside bars indicate a time of consolidation. A big timeframe inside bar can look like a ‘triangle’ on smaller chart time frame. They also form after a successful push in the market, as they ‘stop’ to stabilize until they make their next move. However, they may also form at market turning points and serve as reversing signals from main support or resistance levels.
Now let’s come to the main point. All we have to do is to find three patterns.
- Support or Resistance Level
- Big candle with breakout of level
- Inside bar after big candle
Support or Resistance level should be a fresh level at least more than three touches of that level. Let me show you in the chart.
As you can see in the picture above there is a strong support Level. After strong Support or resistance Level we have to watch for a big candle breaking this level. After that breakout candle we will look for inside candle. Let’s see in the chart
very simple setup!!!. Now let me explain you about stop loss, entry and take profit level.
Entry of the order will be 1 to 2 pips below the inside bar Low in the direction of big candle and stop loss is one to two pips above the inside bar high. Take profit level is measured using Fibonacci extension levels 1.21 and 1.618. You can get 1:4 and 1:5 Risk reward easily with this setup.
Tip of this setup:
You will not get this setup daily so what we will do is that we will use all types of support and resistance
- Dynamic S&R level ( MA )
- Diagonal S&R ( Trendline )
- Horizontal S&R
Any question ?? Comment below