Inside bar: good things come in small packages

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Inside Bar: Efficient Forex Strategy Any trader knows that the market is cyclical. The phrase “trends are replaced by consolidations, and consolidations give way to new trends” has already set teeth on edge. Based on this principle, we can choose our strategies to work within the framework of a current trend, in its reversal or in the breakout of one of its limits of a trading range. At the same time, few people think about how the cyclical nature of the market is displayed on a chart. If we use a time interval close to the maximum (from 1 year or more), trends will be represented as bars with an extended range, while consolidations, as bars with their range reduced.   Therefore, the internal bars of a daily chart are nothing more than the reflection of the cyclical, the beginning of the market in shorter terms.

The inside bar is a chart pattern whose body is Mexico Mobile Number List located inside the previous bar.   As a general rule, its origin signals uncertainty. Investors have been unsure whether the previous movement will continue or not and have taken a pause. A breakout of one of the ends of an inside bar dispels doubts and directs a currency pair in this or that direction. Inside bars on the USD/CAD daily chart LiteFinance: Insider Bar, Effective Forex Strategy |  Litefinance Linda Raschke, author of the best-selling book “Stock Market Secrets,” called inside bars a range reduction and suggested using them to build a trading strategy. First, a filter must be applied: a current range reduction is the bar with the narrowest margin in the last 4 trading sessions.



Once it appears, 2 orders must be made: buy above the maximum and sell below the minimum. A stop order should be placed on the opposite side of the inside bar. If it works, a position opposite to the initial one is opened. “Range Reducing” Strategy on the USD/CAD Daily Chart LiteFinance: Insider Bar, Effective Forex Strategy |  Litefinance ЕIf the reduction of a range is nothing more than the reflection of the cyclical principle on shorter time frames, why not use the “ Two screens of chart patterns ” trading system for more precise placement of orders and to increase trading efficiency? Let's switch to the USD/CAD H1 chart and examine the first and last inside bars on the daily time frame. In October, USD bulls managed to penetrate the downtrend of the USD/CAD pair thanks to the narrowing of the range.