Inside bar MT4 Indicator – Free MT4 Indicator 

 February 5, 2016

By  Advanced Strategies

Inside Bar MT4 Indicator

The MT4 Inside bar indicator is a relatively simple indicator which plots the most recent inside bar that is formed by plotting two horizontal lines, marking the high and the low of the inside bar. The Inside bar is formed when price posts a high and a low within the previous bar’s high and a low. In a way, the inside bar is like a Harami candlestick pattern, but differs as only the high and low are considered to validate an inside bar, whereas a Harami pattern takes into account the candlestick’s body and the previous and current close. The inside bar, as the name suggests, is ideal for use with the OHLC bars. Of course, even candlestick charts can be used with only the high and the low are considered.

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What are Inside Bars and what do they signify?

Inside bars are a sort of price congestion. In more than 80% of the cases, inside bars are followed by a strong momentum led break out in any direction. While it is not recommended to trade inside bars in isolation, when combined with other indicators such as moving averages or even support and resistance levels, inside bars make for a trigger for the signals

For example, if you consider a support level, where you see an inside bar, the chances of an upside breakout is more, than to the downside. Likewise, when an inside bar is formed near a resistance level, there is a high likelihood of a downside breakout. Similarly, when two moving averages have signaled a downtrend, selling a downside breakout from the inside bar is the more probable outcome.

Inside Bar MT4 Indicator Settings

Once you add the MT4 inside bar indicator into your MT4’s indicator folders and add it to the chart, you will come across a few settings as shown in the picture below.

Inside Bar MT4 Indicator Settings

Inside Bar MT4 Indicator Settings

The above settings can be left to default.

Once the indicator is added, you will see the most recent inside bar being shown including a comment on the top left corner of your MT4 chart screen with two horizontal lines being plotted, marking the high and the low of the inside bar, shown in the next picture below.

Inside Bar MT4 Indicator - ChartsInside Bar MT4 Indicator Charts

How use the Inside Bar MT4 Indicator?

The first step is to either make use of support/resistance levels or any other indicators to ascertain the market context. In this example, we make use of the Stochastic oscillator and make use of divergences as the leading signal while using the inside bars as a trigger for the trades.

Trading with Inside Bar MT4 IndicatorTrading with Inside Bar MT4 Indicator

In the above chart, we first identified a potential set up based on the hidden bearish divergence that was formed as the Stochastic printed a higher high but price printed a lower high, indicating that the bias is to the downside. Therefore any nearest inside bars being formed is likely to see a downside breakout. Now that the set up is ready, in the next candle close, we see the Inside bar alerting us to the sell signal. We sell at the low of the inside bar, while placing stops at the previous bar’s high. The trade is exited at the nearest support/resistance level, giving us a trade that was good in terms of risk/reward but also one which was executed quickly.

Now let’s take a look at a live trade set up. The chart below shows a bearish divergence, with the Stochastic making a lower high while price made a higher high. This bearish divergence alerts us to a move to the downside, so we look for inside bar to breakout lower. True enough, a few sessions later, an inside bar was formed. So a short position was taken at the Inside bar’s low of 1.45726, with stops at the previous high which is at 1.4617. We are looking to exit this short trade set up at the nearest support/resistance level, which is identified at 1.4445.

Inside Bar MT4 Indicator - Sell SetupInside Bar MT4 Indicator – Sell Setup

Using the Inside Bar MT4 Indicator to Improve as a Trader

  • While Inside bars might seem simple enough, bear in mind that they are prone to giving false signals. A common trap is prices breaking out after the inside bar is formed, but then closing back inside the inside-bar’s range. This is a classic trap and often results in sideways price action
  • Never trade inside bars in isolation
  • Always keep an eye on the preceding bars that are formed
  • The  Inside barMT4 Indicator prints new ranges whenever a new inside bar is formed, therefore traders should always note the inside bar levels when a trade set up forms

Inside Bar MT4 Indicator Download

We hope you have enjoyed this powerful tutorial on using the Inside Bar MT4 Indicator. At the same time, we have prepared a this powerful indicator for you to download and put to use immediately. As always, remember to first practice only using a Forex demo account before going live with it. Never wrong to test out until you are comfortable. Click on one of the share buttons to unlock the download link.

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Leave us a comment below to let us know your thoughts on this indicator. If you like this indicator, you might like see other indicators that we have carefully selected that will help you in your trading journey.

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