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LESSON: Inside Bars as Continuation Signals

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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”]When looking for a potential inside bar setups we are looking for the same sort of market as if we were going to enter a continuation engulfing bar.

We need to keep in mind we are not trying to enter reversals with this setup, but trying to jump aboard a move that has already started and then continue ride it.

We need to look for markets that have space to trade into that have an existing move happening. Like with the continuation engulfing bar we must be very careful that we are not trading into key areas or that we are going against the trend.

Clear – Obvious Moves

The whole idea of this setup it to give traders a chance to make some money out of a clearly moving market.

Examples of two superb continuation inside bars are below. Notice these setups were with the already existing trend and all the trader would be looking to do is jump aboard the already moving down trend. Entries would have been taken at the break of the housing bar.

CHART EXAMPLE #1:

Please note if price goes to the other side of the housing bar before breaking in the trade direction the trade is invalid and pending orders to enter should be cancelled.

Unlike many others who enter the inside bar we are only trading the one way. Before setting orders we are only trading with the trend and not against it. This means we will either have sell or buy orders in the market but not both. We will only enter if price breaks out in our trade direction.

As stated before space is a huge factor in the inside bar being a good setup. For our trade to work out we need to have space to move into. This is even more important than our normal setups because we are not trading from pullbacks but instead looking for the market to continue.

CHART EXAMPLE #2:

In the chart below you will notice just how much space the inside bar had to move into. This was “key” because there were no areas that were going to immediately halt price in its tracks.

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