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LESSON: Inside Bar’s as Continuation Signal

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[op_liveeditor_element data-style=””][text_block style=”style_1.png” align=”left” font_size=”16″ font_font=”Montserrat” font_color=”%237e7e7e”]The inside bar is a candle that is very popular in the trading world.

The reason for this is high quality A+ setups on daily charts (not intraday) using other price action signals only form 3-8 times a month. That leaves roughly 20 other days a month with no signals.

It is a bit of a ‘fix all’ type of setup where if we don’t have another setup, we can fit the inside bar in.

Of course some traders are super at trading at the inside bar and have made it their own. They chose to focus on it, and have perfected it.

Inside Bar’s False Breaks When Traded as Reversals

What is always never mentioned are just how tricky inside bars (IB’s) can be and also how many false signal that they create. So many traders have their accounts killed by inside bar trading because they are trying to trade them way to often and in way too many different ways.

Inside Bar trading can be done and it can also be profitable, but the problem for new traders is that inside bars present an opportunity to trade almost every day in a lot of different forms. They give the opportunity to over the account super quickly – before even moving to smaller time frames!

At Forex School Online we do not trade inside bars as reversals. There are other trigger signals that are far more reliable to confirm a market is reversing than the inside bar. This next section is going to show you how you can get into a market that is trending in one direction and profit from the trend continuing.[/text_block][/op_liveeditor_element]

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Inside Bar Structure:

The inside bar is a 2 bar / candle pattern that must have the following:

• Housing candle (candle before inside candle)
• The inside candle must be completely inside the housing candle. This does not matter if it is the body or the wick of the housing candle is simply must be
• The inside candle can have matching lows or highs as long as price is contained within the housing

An example of the inside bar structure is below. The first example is of a candle chart and the second is of a bar chart.

CHART EXAMPLE #1:

CHART EXAMPLE #2:

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