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Bar patterns are nifty short-term patterns that are useful for timing trades and finding logical
stop-loss points. No price action trader can do without learning about bar patterns.
And these are 10 bar patterns that you must know.
Reversal Bar Patterns
1. Reversal Bar
2. Key Reversal Bar
3. Exhaustion Bar
4. Pinocchio Bar
5. Two-Bar Reversal
6. Three-Bar Reversal
7. Three Bar Pullback
Volatility Bar Patterns
8. Inside Bar
9. Outside Bar
10. NR7
Essentially, a key reversal bar is a violent display of strength that hints at a change of market
sentiment.
How do we trade it?
1. Buy above a bullish key reversal bar (If uncertain, wait for price to close
above it before buying.)
2. Sell below a bearish key reversal bar (If uncertain, wait for price to close
below it before selling.)
3. Exhaustion Bar
2. Sell below a bearish pin bar that is rejected from a resistance level
5. Two-Bar Reversal
2. For bearish reversals, sell below the lowest point of the two-bar pattern.
6. Three-Bar Reversal
A three-bar reversal pattern shows a turning point. Compared to the other reversal patterns, the
three-bar reversal pattern is the most conservative one as it extends over three bars, using the
third bar to confirm that the market has changed its direction.
How do we trade it?
1. Buy above the last bar of the bullish pattern
2. Sell below the last bar of the bearish pattern
7. Three-Bar Pullback
2. Within a bear trend, wait for three consecutive bullish bars. Then, sell below
the next bearish bar.
8. Inside Bar
2. Place only one order (buy or sell) according to the market trend.
3. Wait for a break-out of the inside bar and trade its failure.
9. Outside Bar
2. Trade its break-out, especially when the outside bar closes near its top or
bottom. (e.g. Popgun Pattern)
10. NR7