Another highly-effective Forex trading strategy for beginners is the inside bar strategy. Unlike the pin bar, the inside bar is best traded as a continuation pattern. This means we want to use a pending order to trade a breakout in the direction of the major trend.
Below is an illustration of an inside bar during a rally.
Notice how the bar preceding the inside bar is much larger in size. This bar is called the “mother bar” because it completely engulfs the inside bar. The real magic to this strategy comes after the consolidation period, which is represented by the inside bar, on a break of the mother bar’s range.
Below is an inside bar that formed on the USDJPY daily chart during a strong rally.
Notice how USDJPY was coming off of a very strong rally when it formed the inside bar on the chart above. These are the best inside bars to trade because it shows a true consolidation period which often leads to a continuation of the major trend, which in this case is up.
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