Trading Setup 5 - Inside Bar

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Before we start, we have to define what is an Inside Bar.

An Inside Bar is formed when the body of a candle can fit completly inside the previous candle(motherbar), for this you count the shadows of the motherbar.(simple explanation)
Inside-bar-characteristics1.jpg

To use this setup, you'll need two things: an instrument in uptrend and a 50 period simple moving average.

inside bar1.jpg
When the price is above the 50 SMA, and a Inside Bar appears, buy at the break of the high of that candle. Stop Loss on the low of the Inside Bar, or Mother Bar, you decide. As usual, backtest first :)
Beware of the spread, set your entry and stop loss accordingly. Don't do it like in the images, because it will hit stop loss, or entry too soon. You have to set it a bit far.
inside bar2.jpg

Set your Take Profit, you'll need the Fibonacci tool.
Measure the amplitude of the Mother Barinside bar 3.jpg

Project it from your entry point on the Inside bar
insidebar4.jpg

And thats it, take profit at 100% Fibonacci tool retracement.
Since we are going to enter in an uptrend, you might not want to close your whole position there, you might close 50% for instance. Or any other percentage of your choice. This is also something you have to backtest. Thats the job of the trader..Backtest :) Have fun.

Trading Setup 5 - Inside Bar | Ecency