Inside Bar indicator
Inside Bar is a reversal chart pattern that forms when the current candle is fully within the range of the previous candle. Inside Bar indicates the balance between buyers and sellers that happens after a sharp up or down move. Sometimes it is followed by the trend reversal.
Inside Bar indicator is created on the selected period [Number Of Bars] where minimum [Min Length] -1 candles have higher low and lower high than the first candle in the group.
Inside Bar can be a Bullish or Bearish signal depending on the preceding trend direction. If the market moved up before the Inside Bar formation, then this pattern gives a signal to open Sell position or close Buy position. And vice versa: if the market moved down before the Inside Bar formation, then this pattern gives a signal to open Buy position or close Sell position.
It is recommended to use additional fundamental data or technical analysis to confirm the signal of Inside Bar indicator. For example, defining support and resistance levels would help you make right trading decisions.
Posted Wednesday, June 22, 2011