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The Multi Inside Bar pattern is a variation of the classic Inside Bar pattern, which consists of a smaller bar (inside bar) contained within the high and low range of the prior bar. The Multi Inside Bar pattern takes this concept further by stacking multiple inside bars within each other consecutively.
Here’s a breakdown of how the Multi Inside Bar pattern forms and what it signifies:
Traders can use the Multi Inside Bar pattern in various ways, depending on their trading strategies and risk tolerance:
Breakout Strategy: One common approach is to wait for the price to break out of the range formed by the Multi-Inside Bars. Traders may enter a long position if the price breaks above the pattern’s highest high or a short position if it breaks below the lowest low.
Continuation Patterns: In some cases, the Multi-Inside Bar pattern can serve as a continuation pattern, signalling that the prior trend will likely resume once the consolidation phase is over. After the pattern is completed, traders may look for opportunities to enter trades in the direction of the prevailing trend.
Volatility Expansion: Since the Multi Inside Bar pattern often precedes a significant increase in volatility, traders may also use it as a signal to anticipate more significant price movements. Options Traders can grab the opportunities with a Spread strategy.