I continue to publish trade methodology materials on forex called Price Action.The theme of today's video - Inside Bar pattern (Inside Bar).Inside the bar, along with Ping-Bar, it is a very powerful setup: Price Action, if we use it wisely.
This setup is quite known among forex traders and is one of the most fundamental in the Price Action methodology.Most often it is referred to as a model continuation of the main trend, although it can also act as a reversal pattern.
In general, Internal Bar - a figure for advanced traders since beginners in the forex possible problems with its interpretation.However, if you know how to properly use the inner bar and what you should pay your attention, that with it you can catch quite a strong trend.
about this and many other things we will talk today in this article.
What is inside bar?
Internal bar - it's full-bodied candle, followed by a small candle, a wholly owned within the range of the previous (full-bodied) candles :
first full-bodied candle
If you see on the chart Full-bodied candle, behind which there is a spark, located within its range, but it is a large size, then this combination is not right inner bar:
Why?Because in this case, lost all sense of logic setup.Why do we take into account this phenomenon and why we can sell it?To do this is to answer a different question.
What does this figure?
It means that the strength of this movement petered out as the following candle is small, and there was a temporary agreement on price between buyers and sellers.We can say that this little truce before a new battle.During the truce, we can enter the market and to follow the well-established trend.Either enter against the trend.
Next we are covered at what direction the right to enter and what you should pay your attention.
Just as is the case with other setups Price Action, we need support on the level of support / resistance.If you see an inside bar, hanging somewhere in the middle of the graph, then such a deal is not to climb, as the pattern is devoid of support.
directly on the chart, the inner bar is as follows:
As you can see, in the beginning there is a full-bodied candle, followed by a little.In this example, we had an internal bar, which was a counter trend.
he relies on this level:
interesting is that it is not necessary that the parent candle rested on its base level.If he stands on the bar domestic level and has a support, then you have every reason to enter the market.
This example, depending on the interpretation, and you are using the input method in the trading market, probably would have brought loss.However, with a particular approach, and could bring a profit.
Another example of this setup:
Parent candle breaks the level, and then there is an internal bar, which is based on the level.And on all levels of 1.5500.As we know, the round price values by themselves are important support and resistance levels.
In this example, you should pay attention to the fact that the low point of the inner bar is lower than the low point of the parent candles.This error is acceptable.Since this is a daily chart, the 4 points can be considered a small error.
Remember that technical analysis - is an art, not an exact science.And small deviations take place to be, because this setup is still in force.
How to enter the market?
Let us assume that we were able to determine that our setup quality, is at the level and in line with our trading technology.
There are two most common entry techniques for inner bar:
- Classic - the entrance to the parent spark breakdown.
- Login pending order on the breakdown of the inner bar:
Which way is most appropriate in your trading?
It all depends on how you want to be sure to enter the market.Classic entrance to the breakdown of maternal candles at high or low is slower.The fact that you plan to enter the market, but get more confidence in the price of the chosen direction.
Entrance to sample at the point of the inner bar earlier, but it is risky.You will enter the market earlier, but if the price breaks through the outermost point of the inner bar and then unfold, then work your stop loss, which might not be.
Personally, I tend to work with the breakdown of maternal candles.One should always look at the situation.It is necessary to assess where in relation to the parent candle inside bar, as was a large candle parent, and is now the level of personifying under a support.All of this requires your expertise in the Forex market.
How to put a stop loss?
in any transaction we will put out a stop loss.This is necessary in order to protect your trading account and do not suffer large losses.There are several options for issuing stop loss for this setup.
The first one is a classic.Stop loss is set for the other end of the parent candles:
This option is not very effective, as the parent candle can be very large, therefore, and feet may be too large, and if such order is triggered, it is not bad hurt your deposit.
next version of the stop loss level for:
This option is more than reasonable, since the level of the intersection would mean that we were wrong.It is used when it is appropriate.That is, it does not carry the risks of a huge number of points.If the level is not very far from the entrance, then this option may well be used.
And the final option - stop loss exposure for the opposite edge of the inner bar.
It is also appropriate for this trade.
You would think that such a stop loss is very easy to clear.Let it make us repeatedly to make a mistake, but also enable and periodically take profitnye transaction, which will be several times larger than our initial stop loss.
Thus, in error, we will lose a minimum number of points.
How to set the take profit?
After we put the stop loss, we need to set a goal and set the take profit.
What are my options?
First, you can put take profit at the next level of support / resistance:
Second, stop loss multiplied by the N-th number of points.
also possible for fixed Teika equal to 30-40 points on the daily chart.If you are trading in the graphs below, the fewer points.
This option is suitable for those who enjoy the confidence that the profit will be taken.Let it will not be very big, what could be, but the probability of it getting to be high.If you use this approach with a small stop loss, then it is quite right to life.We can also use a trailing stop to exit trades on the machine.
imagine that we put up a stop loss of 20 points.Price passes 40 points, and we translate the transaction to breakeven.That is, move the stop loss to entry point.Next exhibit trailing stop or some distant goal.Even if the market will unfold against us, we still did not lose.The most common methods of profit-taking for this setup - this is the next level, the number of fixed points and stop loss multiplied by n.
Which one to choose the best?
It depends on your trading and market situation.For beginners, I suggest using a fixed level.Expose a certain number of points, depending on the currency pair and timeframe.But it is worth remembering that this is a fixed number should be greater than the inner bar.
nuances of working with inner bar
Entering the trend
I'm sure you can read it and hear so many times, but still I want to repeat that need to go with the trend.This increases the probability of making a profit in the transaction.
Size maternal candles
If a parent and a huge candle disproportionately larger than the inner bar 10 times, it is likely to be followed by a significant pullback and this setup is not worth taking.
If a parent candle is too large, it is best to skip this setup:
If, after such a candle formed inside bar, then enter the market is not worth it.Candle is too big and it is likely that a rollback is possible.Large candles we are trying to pass.
not trade flat
Any setup, consisting of one or two candles, it should be after a certain movement.If candles are in a row and there is a setup, the climb is not necessary.Better to miss than to risk unnecessarily.
Take inside bars small
As we explained earlier, the inner bar is a temporary agreement on price between buyers and sellers.How can there be harmony in the price, if the inner bar high?If it is rather big, there is no agreement then, and most likely, the market situation is quite different.
entrance towards the inner bar
This can significantly increase the efficiency of your work with this setup.What I mean?
Imagine that we have a parent candle bullish and bearish candle inside.Hence, we consider only the input in the direction of sales.If the inner bull bar, we consider only the entrance to buy.
Why is this happening?
As we explained earlier, the inner bar - this is a temporary agreement between the sellers, but still has some advantage.This is what shows the inner bar.In my trading, I try to take the setups that match the color of the inner bar.If the inner bar bullish, we are looking for an opportunity to enter the purchase.If the inner bar bearish, we are looking for an opportunity to enter the sale.This filter helps to increase the overall profitability of this trade setup.Remember that you can not pay attention to the color of the inner bar.It is in any case will work, but the effectiveness of the pattern will be slightly less.
We sell only during
US and London session Like other setups Price Action, an internal bar starts to work well on the hour timeframe above.If you trade intraday, try to trade on the American or the London session.Because after we found an area of agreement between buyers and sellers, we need a movement to take profits.If the setup is formed in the Asian session, then such motion may not be, but if so, then what is the point to enter the position, is not it?
If the internal bar - doji or pin bar
If the inside bar formed pattern doji or shape pin-bar, in such cases, I would not advise to go into the market, because the situation is unclear:
Onchart shows a bullish candle and followed her inside bar.But while the bar is a pin-bar with a large tail.Such a signal is better to skip.It is better to calm down and wait for further developments.As you can see below, the chart is nothing special happened.
In the graph we can see the inner bar with the level of support:
Pay your attention that the inner bar occupies one half of the maternal candles and in this case I would not recommend to enter the market.Let
later we see a slight increase, but next time it could turn against your position.
Another figure, which should be missed, is shown in the following screenshot:
The inner bar is very long tail.As we can see in the future, growth will not happen, so we would not have come into the market.
In the following example, there is an adequate situation:
inner bar is within reason.The tail is longish, but not critical.It can be said that the agreement was in this place.
Pay your attention to the fact that the bar was bullish.So the most appropriate option would be - trade buying.Then we can see upward movement.The nearest resistance level is just below the inside bar.In this case, you can log in buying pending order just above Haya inside bar and take some profit.
Stop loss we would put just below the low point of our inner bar:
With this, not the strongest level of resistance, I would consider small sized target with inner bar.In this case, about 85 points.And although we could take a little more of the items, if there is such a weak support much not worth the risk.
Now I would like to show you here is a site:
where you can find: a pin-bar, domestic bars, rails, and a lot more then.But some previous movement in this segment no.Therefore, we simply ignore this price action.Any figure consisting of one or two candles, should be preceded by some kind of movement, visible to the naked eye.
Consider another interesting example:
In it we see that the level of the rails there.About this the setup, you can see the material on our website.Behind him there is a bearish candle pattern and then formed an internal bar.Though the level and is far from the ensuing setup, however, it is based on the previous setup.And this combination gives us the opportunity to enter into a transaction.Stop loss we put just above the inside bar.
As we can see in the chart, the trend was clearly bearish, and therefore could be a good profit.By itself, the setup was not very strong.But, nevertheless, using a trailing stop, you can collect a lot of points.
The following example shows a situation where the parent candle appears very long tail:
you observed the prerequisites for a trend reversal.Opening a position against the trend, it is necessary to rely on small goals, and if not to be greedy, then take profit in this case would be taken.
Another setup with the level of support:
As I have often said to you in this article: "No need to be greedy."Expose the small target and stop loss.In this case, you are also able to take a small profit.
not counter Another example:
As you can see, the price after the formation of the setup took place is still quite a long distance to the top.It would be possible to take aim at 2 or 3 times longer than the stop loss.
I think many have a logical question: How to enter the market on the inner bar?According to the trend or against the trend?
The answer is very simple.You should look at yourself inside bar.In its direction, as well as the fact that there are no obstacles to the movement of the price in the form of support and resistance levels.
Interestingly, the inner bar will appear more often on low timeframes.These include the hour and minute charts.This is due to the fact that days consent rates are less likely than hours agreement between buyers and sellers.All because one day there is a variety of different events.
Another example of where price is in the channel, and some do not have a clear trend:
But if we pay attention to the inner bar and put a buy order, you would get a good profit.
Internal bar - not an easy figure to interpret.Good internal bars in the chart are not so often, so do not look for them where they do not exist.If you are unsure, it is best not to enter the market.Always look in the direction of the inner bar as it very often suggests the future direction of prices.