Inside Bar Actionable Signal

The inside bar is not an actionable signal, but the next candlestick decides the action of market makers. 

It helps to do the higher timeframe analysis to get high probability trade setups in the strat patterns. 

In this article, I will explain how an inside bar can be used as an actionable signal and how it can help in timeframe continuity. So, make sure to read the full post. 

How do you identify the inside bar accurately?

Inside the bar is a candlestick pattern in which the most recent candlestick forms within the range of the previous candlestick (mother candle). On the lower timeframe, we will see that the price will be making an inward triangle pattern. Each progressive wave will be smaller than the previous wave. It represents the indecision in the market.

To find the inside bar pattern on the chart, follow the following rules:

• Mark the high and low of the most recent candlestick, and it must have a significant body. It must not be a high-wave candlestick.
• The next candlestick will make a higher low and lower high. This is an inside bar.
• The color of both candlesticks does not matter. The break of the inside bar decides the future direction of the trend.

For a detailed overview of the inside bar, you can also read scenario one from our website. 

When does the inside bar become in force? 

As I told you above, the inside bar is not an actionable signal without the breakout. When the price breaks the high or low of the inside (break direction depends on the trading strategy), then it will become an in-force pattern. Next, you can expect the 2-2 continuation candlestick pattern. 

Look at the image below for a better understanding of this pattern. 

When should the inside bar be traded in timeframe continuity?

In the timeframe continuity, we align the strat patterns on higher timeframes so that we can accurately determine the direction of trends or market makers. 

So, if any timeframe contains the inside bar pattern, then we will avoid trading in that currency pair until the price breaks. We will also make a 2-2 pattern that aligns with the other timeframes. 

Simply avoid the inside bar pattern in the timeframe continuity and wait for a clear breakout. 

Conclusion

This was a short article about the inside bar as an actionable signal and how we can use it to align timeframes. 

I highly recommend that you backtest this pattern multiple times. I will explain more about inside patterns in the later articles. 

If you have any queries, then don’t forget to ask in the comments below.

Thanks