3-Inside Up/Down Price Action Forex Trading Strategy

The 3 Inside Up/Down forex trading strategy is a trend reversal price action trading pattern that can be spotted at the top or bottom of bullish or bearish trend respective.

Trading this price action alongside some custom indicator, does increase the chances of winning. The pattern is essentially a triple candlestick pattern as depicted in our examples below.

Chart Setup

MetaTrader4 Indicators: ChandelierExit.ex4 (default setting), chanel scalper.ex4 (default setting)

Preferred Time Frame(s): 1-Minute, 5-Minute, 15-Minute, 30-Minute, 1-Hour, 4-Hour, Day

Recommended Trading Sessions: Any

Currency Pairs: Any pair

Download

Download the 3-Inside Up/Down Forex Trading Strategy

Buy Trade Example

Fig. 1.0

Strategy      

Long Entry Rules

Initiate a buy entry in the market if the following indicator or chart pattern gets displayed:

  1. If the 3-Inside Up price action pattern forms at the tail of a downtrend as depicted by candlesticks 1, 2 &3 on Fig. 1.0, price is said to be making a U-turn in the opposite direction i.e. a trigger to go long on the pair of interest.
  2. If the orange line of the chanel.ex4 scalper custom indicator forms below the candlesticks as shown on Fig. 1.0, price is said to be pressured to the upside i.e. a buy signal.
  3. If the bands of the ChandelierExit.ex4 custom indicator widens, with price trading around the upper band, it is an indication that sentiment in the market is bullish, hence a buy signal is imminent.

Stop Loss for Buy Entry: Place stop loss 2-5 pips below the low of the pattern.

Exit Strategy/Take Profit for Buy Entry

Exit or take profit if the following holds sway in the market:

  1. If the 3-Inside down price action pattern forms at the peak of the upside, an exit or take profit is advised.
  2. If price closes below the orange line of the chanel.ex4 scalper custom indicator as seen on Fig. 1.0, an exit or take profit is advised.
  3. If the bands of the ChandelierExit.ex4 custom indicator contracts, price is said to be entering range-bound territories i.e. an exit or take profit is appropriate.

Sell Entry Rules

Enter a sell if the following rules or conditions are upheld in the market:

  1. If the 3-Inside Down price action pattern forms at the peak of an uptrend as shown by candlesticks 1, 2 &3 on Fig. 1.1, it is a signal to sell without delay.
  2. If the yellow line of the chanel.ex4 scalper custom indicator forms above the candlesticks as shown on Fig. 1.1, price is said to be pushed lower i.e. a sell signal.
  3. If the bands of the ChandelierExit.ex4 custom indicator widens, with price trading around the lower band, price is said to be bearish, hence a sell signal.

Stop Loss for Sell Entry: Place stop loss 2-5 pips above the patterns’ high.

Exit Strategy/Take Profit for Sell Entry

Exit or take profit if the following olds sway on the activity chart:

  1. If the 3-Inside up price action pattern forms at the bottom of the downtrend, an exit or take profit is advised.
  2. If price closes above the yellow line of the chanel.ex4 scalper custom indicator as seen on Fig. 1.1, an exit or take profit is advised.
  3. If the bands of the ChandelierExit.ex4 custom indicator contracts, price is said to be entering range-bound territories i.e. an exit or take profit is appropriate.

Sell Trade Example

Fig. 1.1

Free Download

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About The Trading Indicators

The ChandelierExit.ex4 indicator was created by Charles Le Beau and featured in Alexander Elder’s books, the Chandelier Exit.

It is broadly used for setting stop-losses during a trend, however, the ChandelierExit.ex4 can also be used as a trend tool as seen in the examples refer to above.

The chanel.ex4 scalper is a trend indicator that paints an orange (bullish trigger) line below price bars and a yellow (bearish trend) line above price bars to depict market trend.

The 3-Inside Up/Down is a 3-candlestick formation that is deployed in spotting trend-reversal patterns that form at the bottom/top of a downtrend/uptrend respectively.

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