INSIDE BAR's

Inside Bar (IB)

It is a candles Setup which is used to trade on either side ( Buy or Sell ). It can be 2/3 candle formation, and it generally indicates range narrowing. 

In IB the present candle's High is lower than previous candle's High and present candle's Low is Greater than Previous candle's Low, Hence the Previous candle is Known as MOTHER CANDLE and present candle is known as BABY CANDLE.

Buy is initiated when range Breakout happens on the upside, usually the success rate for such Breakout's Is very High. The Move Here is vigorous and is used to make some quick gains.

It can be seen and used in any Time-Frame, the success rate Remains the same.

Inside bars show a period of consolidation in market. A daily inside bar will look like a triangle on a 1 hour or 30 minute chart time frame. They often form following a strong move in a market, as it pauses to consolidate before making it's next move. However, they can also form at market turning points and act as reversal signals from key support or resistance levels.

THE BEST THING ABOUT IB's ARE THAT THEY OFFER VERY LOW RISK AND VERY VERY HIGHLY REWARDING SETUPS.

SOME IMPORTANT POINTS TO REMEMBER ->

1) A 3IB is More effective than 2IB, which is more effective than a single IB, Hence it is difficult to find the earlier one (3IB).

2) The success rate increases when inside bar is formed at support/resistance area.

3) Volume Dryness is a supportive measure in such cases.

4) "TREND IS YOUR FRIEND" -> A inside bar breakout on upside in an Uptrend means resuming of strong move, whereas a breakdown means the end of uptrend for the moment, and so is the case for Downtrend Inside bar action.

5) No strategy has 100% success rate, but what's important is a "GOOD" Strike rate, which can be seen in case of IB, so remember that many IB's are failures too.

LET US JUMP TO REAL LIFE EXAMPLE's AND LEARN FROM THEM.

A) SINGLE INSIDE BAR ( 2 candle setup)

-> Very easy to find and can be seen frequently, hence success rate is less than the later one's.

-> Following is the IB Breakout seen in SUBEX (NSE) After 4 weeks of range narrowing., also One can see that the IB is formed just above support zone and hence increasing the strength of Breakout.

-> SUBEX rallied almost 60% in next 5 weeks after IB Breakout

B) 2IB FORMATION ( 3 candle setup )

-> Difficult to find as Compared to single inside bar, but higher success rate.

-> This is a 3 candle Setup, where the 3rd candle is an IB to 2nd candle and 2nd is an IB to the 1st one.

-> Following is the setup of  POLYCAB on weekly charts, It broke out of 2IB Setup and has RALLIED MORE THAN 180% in less than a year.

C) 3IB FORMATION (4 candle setup )

-> Very Rare setup, extremely difficult to find but has very high success rate and gives superb performance.

-> This is a 4 candle setup where 4<3<2<1 candle ( '<' indicates Inside ), indicating extreme range narrowing.

-> Following is the Daily Chart of HFCL, it broke out of the 3IB setup and moved MORE THAN 150% in 37 SESSIONS.

NOW YOU ARE ALL SET AND READY TO FIND AND TRADE IB's, I AM ATTACHING SOME MORE PHOTOS FOR YOU GUYS ( FROM INTERNET NAD SOME FROM MY SIDE TOO )

->>THE MOST RECENT EXAMPLE OF 2IB IS ASSOCIATED ALCOHOLS (ASALCBR)

 

ROUTE ON DOWNSIDE

UPTRENDING MARKET IB BREAKOUT EXAMPLE

INSIDE BAR AT SUPPORT LEVELS FOR REVERSAL 

INSIDE BARS AT RESISTANCE FOR REVERSAL 

INSIDE BAR BREAKDOWN IN DOWNTRENDING MARKET 

THANK YOU FOR GOING THROUGH THE BLOG, LET ME KNOW IF THIS BLOG HAS GIVEN YOU SOME INSIGHTS ABOUT INSIDE BARS, YOUR FEEDBACK WILL SERVE AS AN MOTIVATION TO ME FOR WRITING MORE SUCH BLOGS ON TRADING STRATEGIES. CHEERS!!!