The following is a guest post by Miad Kasravi and was originally posted here at miadkasravi.wordpress.com.
There are a several high probability scenarios in which inside bars (IBs) offer fantastic swing entries. And while it is crucial to pick the right wave when swing trading, the way IBs close is the main giveaway as to where it is headed next. Take note of the following properties before exploring different scenarios;
A long and biased wick in a particular direction on the mother candle and in sidebar, signals a desire for price to flow in that particular direction.
A bullish close with a high wick followed by another candle with similar characteristics sparks momentum for a breakout and continuation of a bullish move. Same is true for a bearish close with a long wick to the downside.
An IB is either the result of a tight range and slow moving market or the calm before the storm and a major move on the charts. The latter is less common.
Scenario 1
All IBs have been marked and to the untrained eye it’s a 50/50 chance of getting it right or wrong.
These particular IBs are of highest interest not only because they have lot’s of potential(plenty of room to move) but because both candle wicks pointing to the same direction.
Room to move is key for IB setups to fully flex, especially if sentiment is mixed or not in favor. The following scenarios below take lead from the same concept above.
Swing low
Price was ranging at swing low and building momentum. The swing lower was clean and smooth in price action terms. At the bottom price produced IBs with decisive wicks pointing up. Eventually the range gave way and broke to the top.
Swing low
Price was very indecisive leading down to the swing low. Several IBs with decisive wicks pointing higher. With plenty of spaced to move into, produced a clean-cut signal.
Swing high
Price started to range at swing high. IBs on the top of the range signaled a move lower. With enough clearance to the left of the chart price made a run for the lows.
Swing high
Price got caught up in a range in the form of a double top at swing high. Several candles including IBs had wicks pointing down the way. Once floor got swept price slid lower.
For more posts by Miad Kasravi check out his blog at miadkasravi.wordpress.com. You can follow him on twitter @ZFXtrading.
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