In the last post, I have covered the basics of Inside Bar what is Inside Bar and Psychology behind the Inside Bar. In this post, I will cover how to trade according to Inside bar and different trading strategies of Inside bar.
In the above chart, the first fig is simple inside Bar Pattern and in the second fig bullish Inside Bar Pattern Breakout. Here we can initiate long position after candle closed above the high of Inside Bar Pattern. And the stop-loss will be the low of Inside Bar Pattern. We can make a small modification by shifting stop-loss a few points below the low of Inside Bar Pattern.
Axis Bank Hourly chart, the has formed Inside Bar Pattern. The Stock gave a breakout on the second candle after the Inside Bar Formation and on the next candle in retested the breakout and gave big rally.
Here we can initiate short position after the candle is closed below low of the Inside Bar Pattern. The Stop-loss will be high of Inside Bar Pattern. We can make a small modification by shifting stop-loss a few points above the high of Inside Bar Pattern.
TCS hourly chart, the stock had given a breakout on the second candle after Inside Bar Formation. After the breakout, it has retested the breakout level in many time before giving a good fall. One important thing to note, sometimes it will not retest the breakout and keep following the breakout direction & it will not give chance to enter.
We can trade the Inside Bar Pattern when it is in trend continuation or it is in trend reversal. There are few strategies that we can trade using Inside Bar Pattern. Following are the few examples of Inside Bar Pattern.
Inside Bar Pattern at Pivot Level –
JSW Steel 15 min chart, the stock has formed IBP two times one indicated by a circle and one indicated by horizontal lines. The IBP which is indicated by circle failed to closed above Pivot Resistance. The second IBP indicated by the horizontal lines, the stock has given an IBP breakout and also closed below Pivot Level. This is a good setup for the intraday players.
Inside Bar Pattern near Moving Average –
In this example, I am using an exponential moving average which is acting as resistance. It also formed two dojis back to back which is out Inside Bar Pattern. Here we are getting two conditions to trade.
1. The stock touched EMA but never closed above EMA.
2. Double Dojis indicates indecision or balanced between buyers and sellers.
The first candle after Inside Bar Pattern is breakout candle and the breakout is retested few times before giving a good fall. We can initiate a short position after a breakout candle.
Inside Bar Pattern Near Support Level –
In this chart, the support level was acting as resistance level previously. The resistance level was broken by the gap-up candle. Now this resistance levels will act as a support level. The stock has formed Inside Bar Pattern two times near this support level which gave a good rally.
Following are the few charts of Inside Bar Pattern.
List of abbreviations
IPB – Inside Bar Pattern
MB – Mother Bar
IB – Inside Bar
The information is for educational purposes only and does not constitute an offer to sell nor a solicitation of an offer to buy any security which may be referenced by me. The information provided through my charts is for personal, non-commercial, educational use and display.