If you are a price action trader, you can certainly understand the importance of the power trio: Fakey, Inside Bar and Pin Bar. In the article below, Learn Forex Trading will take readers deeper into the Inside Bar candlestick pattern. So what is inside bar? How complicated is it to use or how reliable is it? All the questions you are wondering will be answered in the following information paragraphs.
Learn about what is inside bar.
Inside Bar in English is understood as “inside candle”. This model will include 2 sets of parts: the Mother Bar (mother candle) and the Inside Bar (inner candle). So why does it have such a name? Because the Mother Bar candle will have a large and long body, completely covering the candle inside. Therefore, the inside candle is called the Inside Bar by traders. Or also known as the “candle inside a candle”. This pattern is used to signal the continuation of the initial trend. At the same time, it signals the end of an old trend. Through that, traders can clearly understand the situation and prepare for the next trends.
Characteristics and roles of the Inside Bar candlestick pattern
It can be said that among the three powerful tools in the Price action world, the Inside Bar candlestick pattern is the most effective assistant. However, to get the best performance out of your trading, understanding the characteristics of the tool is extremely necessary. So what are the characteristics of the what is inside bar candlestick pattern? What are the differences between Inside Bar and what is RSI?
- First, a true Inside Bar pattern must have 2 components: the mother candle and the inside candle. Furthermore, the mother candle must completely cover the Inside candle. At the same time, the top of the Inside Bar must be low and the bottom of the inside candle must be higher than the Mother candle.
- Second, the Inside Bar model is only effective when the states of the Mother candlestick and the Inside candlestick are completely opposite (according to classical theory). Meaning, if the mother candle is green, the inner candle must be red. On the contrary, if the mother candle is red, the inner candle must be green.
However, this theory has been changed up to the present time. The Inside Bar pattern can still be effective when the two candle colors in the pattern are the same. The only condition to satisfy it is that the candle must be inside the candle.
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Popular types of Inside Bar patterns
Currently, according to statistics, the Inside Bar candlestick has many different variations. Here are the 4 most commonly used types of standard Inside Bar patterns:
Double (multi) Inside Bar – Multi-candlestick Inside Bar pattern
The multi-candle Inside Bar pattern is an expanded variation of the standard pattern. It includes 3, or 4 types of candles, or even more. Among them, the most popular form of the multi-candle Inside Bar is the 3-candle model, including 2 inside candles and 1 mother candle. Just like the standard model, the Double Inside Bar does not require conflicting states. The most important thing is that the Inside candles must be smaller in size and completely located within the Mother candle.
Coiling Inside Bar – Nested Inside Bar Forex candlestick pattern
The second Inside Bar pattern is the nested Coiling Inside Bar candlestick. It is formed when 2 or more candles cover each other. It can be understood that the following candles will be covered by the previous candle from the top to the bottom of the candle. In terms of evaluation, the Coiling Inside Bar will be stronger than the basic Inside Bar, because it shows the accumulation of the market very beautifully and steadily. At the same time, it signals pent-up accumulation and a big explosion trend that pushes prices away.
Inside Bar false break candlestick – Fakey model what is inside bar?
Talking about the most complete and meaningful level, it is the Fakey Inside Bar model. This is the combination of Inside Bar with False Breakout. It helps traders see strong reversal signals. Specifically, when the price breaks out of the pattern in one direction but quickly reverses in the opposite direction. At this time, if the trader follows the initial order, he will fail quickly. However, in reality, it was just a fake breakout. After the Fakey candle forms, the market will move again according to the original trend.
Inside Bar and Pin Bar candlestick pattern combined
The final pattern is the Inside Bar and Pin Bar candlestick combined. So Pin Bar combined with what is inside bar candle? That’s when a Pin Bar appeared covered by a Mother candle in front. It can be called both Inside Bar and Pin Bar. If compared to the basic inside candlestick pattern, the inside-pin candlestick type combined will form a Price action pattern predicting a strong reversal. That shows that the market is in a state of accumulation and preparing to move in any direction.
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Meaning of what is inside bar candlestick patterns?
Inside Bar plays an extremely important role and is trusted and used by most traders. Because it has great meaning, creating the best trading conditions for large traders, for example:
- The Inside Bar candlestick pattern signals traders about trend continuation and reversal. However, to recognize reversal signals, traders must have a solid grasp of knowledge and extensive trading experience.
- At the same time, Inside Bar also has the effect of indicating Fibonacci points. So what is the meaning of what is Fibonacci? It is an important price area with a low level of risk that helps traders enter or close orders appropriately.
- Inside Bar even shows what stage the market is in (accumulation or indecision).
Some notes when trading with Inside Bar Forex
After understanding the characteristics and meaning of what is inside bar. Traders need to keep in mind some important issues when trading with Inside Bar Forex as follows:
- If you are a newbie just starting to use Inside Bar, you should choose a daily time frame (From H4 or higher) to trade. Because Inside Bar Forex works best during the day.
- To use Inside Bar reversal effectively, traders need to be equipped with a wealth of experience and time to practice proficiently.
- The big advantage of the Inside Bar is that the Stop Loss point is close to the entry point. However, it is also a drawback that causes a trader’s Inside Bar transaction to be scanned for Stop Loss because the stop loss is too close.
- Avoid falling into traps when using the fake breakout pattern by checking carefully.
- When a multi-candlestick Inside Bar pattern appears, it signals that the market is in a prolonged accumulation phase and preparing for a strong breakout.
summary
Above is all the information explaining the question what is inside bar? If you know how to use it properly, the Inside Bar candlestick will certainly be an effective tool to help your trading performance increase dramatically. However, the most important thing is to firmly grasp basic financial knowledge. If you want to step closer to the peak of trading, follow Learn Forex Trading now to update more useful knowledge.
FAQs:
What is inside bar in Forex trading?
Inside Bar is a price pattern that appears on Forex trading charts. Includes: 1 Mother candle and one or more Inside candles.
How to identify the Inside Bar on the chart?
With just 2 simple steps, you can identify the Inside Bar pattern on the chart: identify the trend and locate the pattern.
What impact does Inside Bar have on chart analysis?
The Inside Bar is important because it shows a pause or accumulation in the initial trend before the price moves into the new trend.