What Does The Inside Bar Mean in Forex ?
What Does The Inside Bar Mean in Forex ?
I'm trying to understand the concept of an inside bar in forex trading. Can someone please explain what it is and how it can be used to identify potential trading opportunities using inside bar pattern?
Re: What Does The Inside Bar Mean in Forex ?
The inside bar pattern is formed when the price is consolidating and form a gradually shorter waves in size, making the price move inwards within a narrow range.
The inside bar pattern is made up of two candlesticks, the first or you can say the larger candle is known as the mother candle and the smaller or the second candle is called an inside bar. The mother candle should fully consumes the shorter inside bar and should not have larger shadows also known as wicks, both upper and lower.
If we go into the technical analysis of this pattern, the inside bar indicates that there is an indecision in the market and it is looking for a direction to go in weather it will go up or go down. This indecision mostly occurs after a big move after which the market pauses to think about the direction to go in. For example if we look at a situation where a bigger move has happened such as a breakout of price from a significant level, the market will be deciding for a direction to move in, weather it will be to continue its upward trend or to go into reversal after a false breakout to trap the retail traders to capture their set stop losses.
The inside bar pattern is very valuable for traders because it often suggest a consolidation phase and using this you can forecast the upcoming moves.
On a higher timeframe the inside bar will only appear as a simple candlestick but in lower timeframes it will make a symmetrical triangle showing compression in the market before a bigger move. This may also suggest a market reversal if they are formed on the support or resistance levels.
The inside bar pattern is made up of two candlesticks, the first or you can say the larger candle is known as the mother candle and the smaller or the second candle is called an inside bar. The mother candle should fully consumes the shorter inside bar and should not have larger shadows also known as wicks, both upper and lower.
The inside bar pattern is very valuable for traders because it often suggest a consolidation phase and using this you can forecast the upcoming moves.
On a higher timeframe the inside bar will only appear as a simple candlestick but in lower timeframes it will make a symmetrical triangle showing compression in the market before a bigger move. This may also suggest a market reversal if they are formed on the support or resistance levels.