3 Bar Pattern which can be used to take Trade Entries. We use the power of Outside bar and inside bar to execute this.
Firstly we need to know what is an
Outside bar, we need the current bars high and low to be beyond the boundary of previous bar high and low
Similarly for an Inside Bar. If the current bars high and low is within previous bars high and low we call the current bar as an Inside bar
. Look to the example Below
When this happens with a combo that sets an Explosive move. outside bars are generally trend trading patterns and inside bars are direction confirming patterns based on closed direction.
outside inside combo Pattern:
In an OI (outside Inside) pattern we need an Outside bar setup, followed by an inside bar setup. Example is shown below.
In case of resistance we look to sell below the low of the outside bar. Incase of support we look to go long above the high of the outside bar.
If we look in the above example we can see clear OI pattern @ a resistance point. The stop loss will be the other side of the OB. IB is generally a compression or a pause at a major junction , when that is confirmed with directional OB the entry is beautiful.
Now dont go in search of this pattern, if it happens and you find it, you can understand that it has a higher probability of winning.
