Trade On Forex

When trading inside bars my preference is to see them in clear trending markets (less noise) and settled at areas where the order flow "could" be in place. We never know for sure as there is no centralised forex order book.

Great areas for these bars include:

• withhold and resistance zones/levels
• Preceding a trend line breakout
• After a trend line breakout
• general pattern breakouts
• Round numbers
• Confluent areas (to be covered in a separate tutorial)
• After a reversal bar

Here are some tips on how I trade this setup:

If price has run 300 pips before hitting one of the areas above then there is a good opportunity of trend exhaustion and lack of momentum to break out/through. If we get an inside bar at one of the aforementioned areas the high and low of the bar will highly likely have indispensable order flow interest. This can give a real momentum surge once penetrated and can help breakout or precisely reverse from the level.

So the inside bars can be reversal or continuation triggers. My preference as a price action forex trader is to see these on a daily timeframe as this gives more time for the order flow to build. People tighten stop losses, place buy and sell orders etc and these can all contribute the strong underlying momentum I look for.

Other points to note consist of the following. Manifold inside bars in succession can give an even good entry as the stop loss can be settled very close to entry. This obviously helps the risk bonus ratio of the trade and can lead to greater profits. A cascading effect takes place as each bar high/low is taken out.

I will all the time try to avoid trading inside bars in markets where there is no liquidity. A 4 hour inside bar at the Asian session will not typically break out as hard as a 4 hour bar formed during London open. I want to see pressure construction and the order flow referenced above. I also prefer to see these on liquid currencies and major time periods like the eurusd daily timeframe.

In conclusion. This simple robust method can be highly productive when used in conjunction with an comprehension of price buildings withhold and resistance. It could be worth your time looking into this to add other string to your trading bow.