Inside Bar Forex Strategy

The Inside Bar Forex strategy is a trading strategy that primarily captures the “Inside Bar” pattern alongside supporting technical indicators that are used to filter out false positives.

We use the inside bar to spot price reversal patterns around key chart levels with the help of the red & blue colored support and resistance-AC custom indicator.

The strategy allows us spot hesitant price actions that form around key market levels, and once we integrate an inside bar to these patterns, we get to see the true picture of price reversals.

Trading the Inside Bar Forex strategy can be very rewarding as they frequently lead to big market moves in the opposite trend direction.

Chart Setup

MetaTrader 4 Indicators: support and resistance-AC.ex4 (Default Parameters), -wmmm-twoPoleButterworth.ex4 (Inputs Variable Modified; CutoffPeriod=36, Colors Width Modified; #1=2, #2=2), Moving Average.ex4 (Parameters Modified; Period=50, Shift=3, Style=Magenta), LinearRegSlope_v1.ex4 (Inputs Variable Modified; Length=42)

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

Recommended Trading Sessions: Any

Currency Pairs: Any pair

Download

Download the Inside Bar Forex Strategy

Buy Trade Example: USD/CAD (US Dollar / Canadian Dollar), H1 Chart

Fig. 1.0

Strategy

Long Entry Rules

Initiate a buy entry if the following indicator or chart pattern gets put on display:

  • If an inside bar forms around a key support level (red support and blue resistance-AC indicator line) as illustrated on Fig. 1.0, it is pointing to a bullish reversal signal i.e. an alert to go bullish on the desired forex pair.
  • If the magenta 50 SMA Metatrader 4 indicator line crosses below the dual colored -wmmm-twoPoleButterworth custom indicator line as shown on Fig. 1.0, the overall market sentiment is said to be bullish, thus supporting an existing bullish bias.
  • If the sky blue line of the LinearRegSlope_v1 custom indicator breaks above the 0.00 signal level as depicted on Fig. 1.0, bulls are said to be driving price higher, thus a signal to buy the stipulated fx pair

Stop Loss for Buy Entry: Place stop loss below the red rising support lines.

Exit Strategy/Take Profit for Buy Entry

Exit or take profit if the following rules or conditions takes precedence:

  • If the inside bar candlestick pattern forms around a major resistance level (redsupport and blue resistance-AC indicator line) during a bullish trend, it is signaling the likely end in the aforementioned trend, as such an exit or take profit stance is advised.
  • If the magenta line of the 50 SMA forex indicator line intersects the dual colored wmmm-twoPoleButterworth custom indicator line while a bullish trend is running, investors should exit or take profit at once.
  • If the sky blue line of the LinearRegSlope_v1 custom indicator breaksbelow the zero reference level during the course of a bullish trend, bulls power is said to be weaning, hence an exit or take profit stance is recommended.

Sell Entry Rules

Enter a sell order if the following holds true:

  • If an inside bar forms around a key resistance level (redsupport and blue resistance-AC indicator line) as shown on Fig. 1.1, it is signaling a probable bearish reversal i.e. an alert to sell the currency pair of interest.
  • If the magenta 50 SMA forex indicator line crosses above the dual colored -wmmm-twoPoleButterworth custom indicator line (refer to Fig. 1.1), the general market sentiment is said to be bearish, thus supporting our earlier bearish bias.
  • If the sky blue line of the LinearRegSlope_v1 custom indicator dips below the 0.00 horizontal level as seen on Fig. 1.1, bears are said to be pressuring price lower, thus a signal to sell the selected currency pair

Stop Loss for Sell Entry: Place stop loss above the blue declining resistance lines.

Exit Strategy/Take Profit for Sell Entry

Exit or take profit if the following takes center stage:

  • If the inside bar candlestick pattern forms around a major support level (around the red support and blue resistance-AC indicator line) during a bearish trend, it is pointing to diminishing bears power, as such an exit or take profit stance is duly recommended.
  • If the magenta line of the 50 SMA forex indicator line intersects the dual colored wmmm-twoPoleButterworth custom indicator line during a bearish trend, an exit or take profit stance is advised.
  • If while a bearish trend is ongoing the sky blue line of the LinearRegSlope_v1 custom indicator surgesabove the zero alert level (check Fig. 1.1), bears power is said to be halting, hence an exit or take profit stance will suffice.

Sell Trade Example: USD/CAD (US Dollar / Canadian Dollar), H1 Chart

Fig. 1.1

Free Download

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About The Forex Technical Indicators Used

The support and resistance- Ac custom MT4 indicator is a technical tool that draws major zones of support and resistance on the activity chart.

The -wmmm-twoPoleButterworth custom forex indicator is an enhanced dual colored moving average indicator that is deployed in measuring trend.

The 50 SMA (Simple Moving Average) is a technical analysis indicator that smoothens out currency pair price data by constantly creating an updated average price over the last 50 periods.

The LinearRegSlope_v1 custom MT4 indicator is a simple statistical method deployed in spotting the direction and strength of a leading market trend.

Technical traders use this method in technical analysis to determine if the market is in an upward or downward trend.

It also gauges the intensity of surge or decline, in line with the previous trend of prices.

Easy Installation

Start using this forex strategy in just 5 minutes. Click here to get started now.

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