Simple Inside Bars

This is a discussion on Simple Inside Bars within the Trading Journals forums, part of the Reception category; Hawkmoon's second 60 minute chart provides a good example of the failed breakout that I mentioned in an earlier post. ...

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Old Nov 12, 2008, 8:55am   #57
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Hawkmoon's second 60 minute chart provides a good example of the failed breakout that I mentioned in an earlier post. I've added a red trend line just to emphasize the point that the trend is down. As inside bars / candles are essentially continuation and reversal patterns, it's possible that someone might see this inside bar (IB) and think 'aha, trend reversal'. On it's own, there isn't enough evidence to support this view, nonetheless, let's run through the scenario where a trader plays this to the long side. I prefer to enter on the breach of the 'holding bar' (HB), i.e. the bar prior to the (IB) - the green line on the chart. I would then expect price to breach the red trend line and, when it not only fails in this endeavor but, is duly rejected by it, I would suspect a failed break out. Price then closes back inside the high / low range of the HB - my cue to exit the trade for a loss. After a failed breakout to the upside heralding a reversal, the probability of trend continuation and a break down to fresh lows increases exponentially. Sooner or later, price HAS to do one or the other. It's tried the first option and failed, so success at the second is now much more likely than it otherwise would have been. The long trade was pretty speculative with little to support it but, now, the short trade has a whole confluence of evidence to back it.
Tim.
PS. For very conservative traders who only want to take the very best and cleanest of set ups, there's an arguement for requiring a failed breakout / break down in the pattern before entering a trade. This will greatly reduce the overall number of trades but, as in this example, it should greatly improve the success ratio of winners to losers. Alternatively, another option might be to reduce ones position size where there's no failed breakout / break down and to increase position size where there is. Just a thought!
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Last edited by timsk; Nov 12, 2008 at 9:09am. Reason: Added PS
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Thanks! The following members like this post: Hawkmoon , foredog , Beserker
Old Nov 12, 2008, 9:02am   #58
 
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foredog started this thread Shows what i know, The 7am bar made new lows at the close, so we can move our stop down.

New stop 15524 (15565 - 15483 = 82 / 2 =41)

New lows again 8am bar

Stop to 15487 (15524 - 15451 = 73 /2 =36.5 so round to 37)

I'll post a chart when i get the chance to copy one from IG and annote it.
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Old Nov 12, 2008, 10:13am   #59
 
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foredog started this thread Another new low so we can move our stop again

New stop 15441 (15487-15396= 91 /2 =46.5 (47))

Having trouble posting a chart, too big apparently....
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Old Nov 12, 2008, 10:19am   #60
 
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Quote:
Originally Posted by timsk View Post
As inside bars / candles are essentially continuation and reversal patterns, it's possible that someone might see this inside bar (IB) and think 'aha, trend reversal'. On it's own, there isn't enough evidence to support this view...

Alternatively, another option might be to reduce ones position size....
You make some valid points in your post, particularly regards the confirmation aspect of playing counter moves. The sizing option (on any strategy play) is a very important, yet under rated tool in most quarters. You get an awful amount of power on a move by feeding into a positive run.

If you look outside of the inside bar trigger for a minute & mark out the major & minor potential reaction zones on your template sheets, you can better estimate where the stops & order flow balance points are at.

Price (pound bull momentum) will definitely need to re-engage & consolidate the bias steps outlined on that hourly sheet before mounting any serious challenge on the 4 hour minor ceiling @ 1.5880 & beyond.

You might experience cleaner & more advantageous opportunities setting up on your favored lower timeframe IB trigger if you wait until price shows itís hand first on & around the key level zones, rather than executing via the inferior action inside these barriers.

Value v/s cost is a key consideration when totting up your bottom line at the end of each month, particularly if youíre running a short-timeframe book.

As long as players continue to book profits on moves thru key support zones & sell into rallies at these lower top markers, then the momentum will keep you honest & allow you to honor the intent via your preferred trigger.

I donít know how you fella's handle or play potential reversals as price pops thru the gears on kickbacks, but I like to see prior zones (be they key swings or higher timeframe s/r camps) overwhelmed & consolidated (break & re-test) before laying bets on counter moves.

But then, those types of plays usually require a whole different set of tools before you can settle back into playing inside-outside bar triggers.

foredog: apologies for clogging up your journal with this stuff - I'll butt out & allow you to continue with your work. I like the fact your content is free of all that indicator garbage. Keep it clean & you'll keep it honest

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Old Nov 12, 2008, 11:09am   #61
 
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foredog started this thread [QUOTE=Hawkmoon;563392]

foredog: apologies for clogging up your journal with this stuff - I'll butt out & allow you to continue with your work. I like the fact your content is free of all that indicator garbage. Keep it clean & you'll keep it honest


No problem at all, happy to have others contributing and pointing things out, there's always ways to improve, keep it up guys.


Another low, how long can this keep going? who knows but we'll just keep riding i down as best we can.

New stop 15413(15441 -15386 = 55/2 = 27.5 (28))
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Old Nov 12, 2008, 11:21am   #62
 
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Chart from earlier

foredog started this thread Here's the chart of the last few days until earlier this morning
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Old Nov 12, 2008, 12:03pm   #63
 
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foredog started this thread Another low, how long can this keep going? who knows but we'll just keep riding i down as best we can.

New stop 15413(15441 -15386 = 55/2 = 27.5 (28))
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