Inside Bar Pattern
Inside Bar Candlestick Pattern
An inside bar candlestick pattern is a very powerful candlestick pattern to signal the end of a running trend and as well as signals the trend continuation on a price action chart.
Inside Bar candlestick is identified by two back-to-back opposite directional candles where the most recent candlestick stays inside the total range of the previous candlestick. If one candle is a bullish candle, then the other candle must be bearish, and vice versa.
The look of an Inside Bar candlestick pattern is the opposite of an Engulfing candlestick pattern.
How To Trade The Inside Bar
In an Inside Bar pattern, if the mother candle is a bearish candle and the inside bar candle is a bullish candle then this inside bar candlestick pattern tends to act as the trend reversal / breakout pattern for bullish traders.
That means if an inside bar candlestick pattern forms at the low level or support area on a price chart, where the mother candle is bearish and the inside bar candle is a bullish candle, then its probable that price will rise up after breaking through the mother candle’s high.
After a bullish candle forms over the mother candle’s high, you can place a buy entry here. Set the stop loss to be 15-30 pips below the mother candle’s low and set the profit target to be larger than the stop loss.
On the other hand, if the mother candle is a bullish candle and the inside bar candle is a bearish candle, then this inside bar candlestick pattern tends to act as the trend reversal / breakout pattern for bearish traders.
That means if an inside bar candlestick pattern forms at the top level on a price action chart where the inside bar candle is a bearish candle, then possibilities are high that price will go down and make a bearish rally towards the downward direction on that market.
After a bearish candle forms over the mother candle’s low, you can place a sell entry here. Set the stop loss to be 15-30 pips above the mother candle’s high and set the profit target to be larger than the stop loss.
Examples
