The Inside Bar pattern introduction
Price action trading looks at how the price moves on a chart. Candlesticks often form patterns that repeat, so you can use them to figure out where prices will go next. One example is the inside bar pattern, which I will explain to you today.
The inside bar pattern is made up of two price bars. The main rule is that the second one should be inside the first one, meaning that its low should be higher and its high should be lower than the first one. It can go in the middle, at the top, or at the bottom.
Most traders agree that what was said above is correct. Some, though, say that the lows or highs of the two candles could be the same.
The Mother bar or MB and the Inside bar are common names for the bars in the pattern (IB).
The inside bar shows when the price stopped moving. After a strong movement, there is often a pause like this. Then, the direction from before is taken. With the inside bar pattern, it is sometimes possible to trade a change in the trend. When this happens, you should use it along with the support and resistance levels.
Trading with the inside bar pattern at Pocket Option
With the inside bar pattern, there are a few ways to trade. But these two are the ones most often used.
First, use the inside bar pattern when the market is moving in a certain direction. You trade with the way things are going. A “breakout play” or “inside bar breakout” is a term you might hear.
The second way is to trade against the trend, which is also called a “inside bar reversal.” Then, it is traded at important price points (support or resistance).
Traders usually set pending orders at the bottom or top of the Mother bar. Let’s look more closely at the points where you should start your trades.
Trading the inside pattern along with the trend on the Pocket Option platform
Opening a sell position during the downtrend
With the inside bar pattern, you should open a sell position when the market is going down and you want to trade with the trend. When this happens, it is known as a “inside bar sell signal.” You can use this strategy for currency pairs (CFDs), but you might also be able to trade it with Fixed Time Trades. Set the pending order at the bottom of the Mother bar, just below the Low value of that candle, to make a trade.
Opening a buy position during the uptrend
When the market is going up, you will get a “inside bar buy signal.” Your pending order should be set just above the High value, at the top of the Mother bar.
With strong trends, you are likely to see a lot of inside bar patterns. This gives you a lot of chances to get into the trade.
Trading the inside pattern against the trend on the Pocket Option platform
Opening a sell position with the inside bar pattern and resistance level
The resistance level is marked on the EUR/USD chart, which you can see below. During the uptrend, the pattern of an inside bar has formed at the line of resistance. You trade in the opposite direction of what is happening now, so you should open a sell position. Here, you can also use a pending order to sell at a price just below Mother’s Low.
Opening a buy position with the inside bar pattern and support level
On the other chart, a support line is drawn for the NZDUSD pair. The inside bar pattern has formed at this important level, which shows that the trend is changing. You should start a position to buy. Again, you can use a pending order to set a buy order just above the Mother bar’s High value.
When the inside bar pattern shows up at key price levels, a strong move usually follows. You have a good chance of making money this way.
Final instructions to trade with the inside bar pattern
People often tell you to “trade with the trend.” Also in this case, and especially if you are new to trading, it is best to trade the inside pattern along with the current trend. Reversals are a little bit harder to trade, and you need to have some trading experience to do so.
The inside bar pattern works best on charts with a time frame of 5 minutes or more. Don’t try to use it with candles that burn for 1 minute. So little time will give you a lot of false signals.
After the Mother bar, there are sometimes a few Inside bars. One, two, or even four candles can be used. The next one will be smaller than the one before it. They tell of a longer period of consolidation. Usually, what happens next is a very powerful break.
After the pin bar patterns, keep an eye out for the inside bar patterns. Most of the time, they send false signals, so it’s important to be able to see different patterns on the chart.
First, on your Pocket Option demo account, try to figure out the inside bar pattern. Choose markets that are going in the right direction and trade in that direction. Don’t try this with real money, because it’s not a surefire way to make money. Be ready to face losses, especially at the start.
Use the comments section below the site to tell us what you think about the inside bar strategy.
