Inside Bar Pattern - 6 Characteristics of A Profitable Setup

1/23/22, 12:59 AM Inside Bar Pattern - 6 Characteristics of a Profitable Setup
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6 Characteristics of a Profitable
Inside Bar Setup
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January 22, 2022
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An inside bar pattern doesn’t come around often. If you ask, why is it? So the answer is,
it’s mostly due to the fact that this particular strategy requires a trend that is strong but
not exhausted.
As markets spend most of their time consolidating or ranging, so finding a favourable

inside bar setup within a trending market can be a difficult task. Now, you might be
1
having a question that what is inside the bar chart pattern?
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Table Of Contents
What is Inside Bar Pattern?
Facts about Inside Bar Pattern
1. Choosing the correct time frame
2. Works extremely well in trending market
3. Inside Bar Setup on a Pattern breakout
4. Size of the Mother candle and inside bar candle
Learn How to make profit out of failed breakouts in just 2 hours by
Market Experts
5. Entering, Exiting and Stop loss at Inside Bar Trade
6. Inside bar Pattern helps in identifying change in trend
Frequently Asked Questions
Is an inside day bullish or bearish?
What does an inside day pattern indicate?
How to identify an Inside bar candle?
Bottomline:
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What is Inside Bar Pattern?

As the name suggests, an inside bar chart pattern engulfs the inside of a large candle,
some call it a mother bar. It’s a pattern that forms after a large move in the market and
represents a period of consolidation.
The inside bar pattern can be a very powerful price action signal if you understand how
to trade it properly. Matching lows and highs are acceptable, however, the inside bar’s
range must not be outside of the mother candle by even 1 point.
Here are some facts about Inside Bar Pattern-
Facts about Inside Bar Pattern

Inside bar pattern within the trading range (or shadow) of the preceding bar.
It is at least a two candlestick formation
Mother candlestick can be either bullish(green) or bearish(red)
The inside bar chart pattern can be bullish or bearish 1
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Understated are 6 important characteristics to know about the Inside bar setup
pattern:- Talk to us..... S
1. Choosing the correct time frame

The first and the most important characteristic is, the time frame you use to set up the
inside bar is extremely important. As in general, any time frame less than the daily chart
should be avoided with this strategy.
This is because the lower time frames are influenced by “noise” and therefore might
produce false signals.
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An inside bar that forms on the higher time frame has more “relevant” simply because
the pattern took more time to form. This means more traders were actively involved in
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its formation.
2. Works extremely well in trending market

If you are planning to trade based on an inside bar candlestick pattern, then you should
always look for a market trend. This strategy does not work in a choppy market or
sideways market as you will be easily stopped out.
In fact, trading with the trend is the only way to trade an inside bar setup. Note that this
pair was in a strong uptrend leading up to both setups. This is the kind of momentum
you want to look for when trading this strategy.
3. Inside Bar Setup on a Pattern breakout

The best inside bar setups form just after a breakout from a preceding pattern. The
reason for this is simple. In a trend, the consolidation is triggered when longs decide to
begin taking profits (selling).
This causes the market to pull back, where new buyers have to take charge in and buy,
which keeps prices elevated. Inside bar pattern continues for days, weeks or even 1
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months until new buyers are able to once again outweigh the sellers and drive the
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market higher.
Below is a great example of a bullish inside bar pattern that formed on the Hindustan
Unilever daily time frame. This is actually a trade setup that was called here at Daily
Price Action and has worked out beautifully thus far.
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4. Size of the Mother candle and inside bar candle

The size of the inside bar compare to the mother bar is very important. In my experience,
the smaller the inside bar is relative to the mother bar, the greater your chances are of
experiencing a profitable trade setup.
Ideally, we want to see the inside bar form within the upper or lower half of the mother
bar.
Learn How to make profit out of failed breakouts in just 2 hours by

Market Experts
If the mother bar has a weak body then it might not be very sure to trade in it. The body
and the size of the mother bar are extremely important, and if the size of the inside bar is
1
small compared to the mother bar it can help you to generate much better results.
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5. Entering, Exiting and Stop lossSearch...

at Inside Bar
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Trade
Entering: – When the price action completes an inside candlestick chart pattern, you
should mark the low and high of the Inside Bar consolidation range. These two levels are
used to trigger a potential trade.
Remember, the inside candle clues us into the eventual breakout and likelihood of a
continuation outside the range in the direction of the break, however, it doesn’t give us
information about the direction of the breakout through the range, prior to the actual
move.
In simple terms, if the price action interrupts the range upwards, then you should go
long. If the price action breaks the range downwards, then you should trade the short
side.
Exiting: – Projecting the potential move with Inside Bar Breakouts can be challenging.
Often inside bar trades can lead to a prolonged impulse move after the breakout, so
employing a trailing stop loss after the price has moved in your favour is a smart trade
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management strategy.
Stop Loss: – In either case (If you are Long or short), your stop should be located below
the bottom of the range, as stated in the picture below. There can be a buffer of 1%
below the range.
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6. Inside bar Pattern helps in identifying change in trend

The inside bar candlestick pattern is such a valuable tool because it tells us that the
market is not as bullish or bearish as it was in the preceding period.
Being able to identify periods of market expansion and contraction will help any trader
improve their odds of finding a winning trade because we know from history that
expansion and contraction can only last so long.
When either of those market phases ends, the resulting moves can be explosive!
Also Read: How to trade with Spinning Top: Candlestick Pattern
The great thing about inside bar candlestick patterns is that they provide visual
evidence that the market has contracted and may be ready to reverse the current
trend. 1
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Frequently Asked Questions
Is an inside day bullish or bearish?

Inside day is both bullish and bearish candlestick pattern.
What does an inside day pattern indicate?

The candlestick pattern indicates a continuation of the prior trend
How to identify an Inside bar candle?

One can identify this pattern by:-
Inside bar pattern within the trading range (or shadow) of the preceding bar. It is at
least a two candlestick formation Mother candlestick can be either bullish(green) or
bearish(red) The inside bar chart pattern can be bullish or bearish
1
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There’s no doubt that inside bars can be a profitable way to trade the Forex market,
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equity, commodity or any other market. After all, it’s a setup that it teaches as part of the
price action course and one that has served extremely well.
However, it isn’t a setup that occurs often, at least not in a favourable context. This is why
I don’t advocate using the inside bar candlestick pattern as your only set-up to trade
the market.
By doing so, you limit your trade potential to the point that you are likely to begin taking
subpar setups. It is, therefore, important to treat inside bars as another tool inside your
trading toolbox rather than the toolbox itself.
The inside bar setup is capable of producing consistent profits, but only to the traders
who mind the six characteristics discussed above.
Tags: candlestick english Inside Bar up trend
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Comments 2
ankit jaiswal
 2 months ago
Nice
 Reply
Sakshi Agarwal
 1 month ago
Hi,
We really appreciated that you liked our blog! Thank you for your feedback!
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1/23/22, 12:59 AM Inside Bar Pattern - 6 Characteristics of a Profitable Setup

59.9k  Share on Facebook  Share on Twitter  Share on WhatsApp 

As markets spend most of their time consolidating or ranging, so finding a favourable

What is Inside Bar Pattern?

Here are some facts about Inside Bar Pattern-

Facts about Inside Bar Pattern

It is at least a two candlestick formation

Mother candlestick can be either bullish(green) or bearish(red)

The inside bar chart pattern can be bullish or bearish 1

1. Choosing the correct time frame

2. Works extremely well in trending market

3. Inside Bar Setup on a Pattern breakout

4. Size of the Mother candle and inside bar candle

Learn How to make profit out of failed breakouts in just 2 hours by

5. Entering, Exiting and Stop lossSearch...

6. Inside bar Pattern helps in identifying change in trend

Also Read: How to trade with Spinning Top: Candlestick Pattern

Frequently Asked Questions

Is an inside day bullish or bearish?

What does an inside day pattern indicate?

How to identify an Inside bar candle?

Tags: candlestick english Inside Bar up trend

Previous Post Next Post

TECHNICAL ANALYSIS TECHNICAL ANALYSIS

 JANUARY 11, 2022  20.2K

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