The Bearish Inside Bar pattern is a trading pattern that indicates the end of an upward direction in the market and signals a downward direction. This pattern is formed by two candlesticks. The first candlestick is an upward one, and the second candlestick is a downward one which does not completely encompass the body of the first candlestick and remains within the opening and closing prices of the first candlestick.
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Mother Bar: A large candle with a significant range
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Inside Bar: A small candle that:
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Opens within the range of the Mother Bar
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Closes within the range of the Mother Bar
Interpretation:
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The Inside Bar pattern indicates a period of consolidation and indecision in the market.
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It can be a sign of a potential breakout or continuation of the previous trend.
Trading Strategy:
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Buy or sell the asset when the next candle closes outside the range of the Mother Bar.
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Set a stop-loss within the range of the Mother Bar.
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Target a price level that is equivalent to the height of the Mother Bar.
Note: The Inside Bar pattern can be used in various trading strategies, including:
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Breakout trading: Buying or selling when the price breaks out of the Mother Bar’s range.
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Range trading: Buying or selling within the range of the Mother Bar.
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Trend continuation: Using the Inside Bar as a confirmation of the previous trend.
Important: The Inside Bar pattern is a neutral pattern and can be used in various market conditions. It’s essential to combine it with other forms of analysis and risk management techniques.
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[Disclaimer: This article is for informational purposes only and should not be construed as investment advice in any way. financestock.in advises its readers and viewers to consult their financial advisors before taking any money-related decisions.]
