Candlestick “Inside Bar” Strategy (Inside Bar / Mother Bar)

Logic explanation: This is a classic Price Action strategy. When a candlestick is completely surrounded by the previous candlestick (mother bar), it means the market has entered a brief period of hesitation, and the subsequent breakout usually has directional guidance.

* Detailed operation:

1. Identify the pattern: Look for an “inside bar” (the high and low points of the current candlestick are entirely within the range of the previous candlestick).

2. Set pending orders:

* Place a “Buy Stop” order 10 dollars above the mother bar’s high.

* Place a “Sell Stop” order 10 dollars below the mother bar’s low.

3. Execution: Whichever side breaks first will be executed, and the other pending order will be canceled.

Case analysis:

A large bullish candlestick appears at the daily chart level (mother bar), followed by three consecutive small candlesticks (inside bars) oscillating in the middle.

* Result: Once the price breaks through the mother bar’s high, it indicates that the bullish shakeout has ended, and the subsequent move is usually followed by a rapid rise of 5%-10%.
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