Suppose it is 12 hours before a big announcement or a Friday or a holiday. During such events, order flow decreases as institutional players leave the market until the end of the risk events. In these times, many internal bars can be formed because there is no one to control the market and there is no high liquidity or flow of orders. If you only trade in the bars, because an internal bar is displayed, you can trade for a non-optimal duration because the market does not get an address before the risk event. This is an example of how to trade a model candlestick patterns because it can be detrimental to your business.
For this reason, it is essential to understand the flow of orders behind the market and to understand why the evolution of prices evolves in the state. In this way, you can determine who has control (buyer or seller). He can tell if it’s a strong or bad break. You can determine whether the trend will continue or not. All of this is fundamental to negotiating prices and understanding how the flow of orders generates such variables.
Here is an example of how all internal bars are not identical and why some of them should be avoided. Take a look at the trading table of the currency exchange rate action below:
In this table, you can see the price action from 9 o’clock in the morning. EST until 1 hour EST (total 18 hours). Take a look at all the bars mentioned above. Here you have a total of 3 internal bars, but no particular reaction is generated.
The price has stagnated in a virtual range of 50p for more than 18 hours.If you only trade in bars because it was a price action model, you would have had a lot of false starts and probably a lot of lost business. Let’s look at another example forex indicators of how an internal bar can be used for a successful operation by reading the order flow behind it.
If we look at the table below, we see that after a very strong trend movement, an internal bar is formed. There may be several reasons for this, but read the ordering process behind.