How To Use Price Action To Profit From The Forex Market Part 2

In this Second part of this collection of articles I would like to focus on one main candle stick pattern that if used correctly can be used as a system all by itself.

I must point out that all of these techniques using price formations work the best on daily charts or higher. You really need to be very good at using them before you consider trading off of 4 hour charts or lower.

The Inside Bar Formation An inside bar is created when the previous bar completely engulfs it. This is a strong sign of uncertainty in the market and a very good place to consider taking a trade.

As always these formations need to be in confluence with a strong support or resistance area to make the trade a high probability trade. I highly recommend using horizontal lines for support and resistance on the charts as traders will have theirs in a similar place. Trend lines are very difficult to trade from because every trader draws them slightly different.

The Inside 4 Bar Formation This is identical to the normal inside bar setup but the previous 4 bars completely engulf it (Sunday bars do not count). This formation gives heads up of a strong breakout forming in the market. I highly recommend you get to know them.

Entries off of inside bars can be tricky, I like to trade the break of the inside bar in the direction of my trade placing the stop behind the current bar. These entries are a low risk high reward trade setup.

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