Remember when I blogged about inside candles some months ago? Well, I have been testing the inside candle trade but on the 1 hour chart, with quite good results. Here is a great example of the this trade from today: Check the hourly chart on the GBPJPY. At 10am edt a small inside hourly candle formed after a very large up candle. This candle closed outside the hourly bollinger band. Now, what I like to do is then switch to the 5 and 15min charts and watch for price to break the bottom of that small hourly candle, this was at 201.10. Sure enough just a couple 5min candles and price begins to come down. So I entered a sell trade at 201.08. I also noted that the 50 ema on the 15min was pretty far down below where price was, about 100 pips away. I made this 50 ema my target. I was surprised at how quickly price started to fall, and it helped that the dow was coming down at the same time during this New York session. I was able to take profit at the 50ema for about 100 pips, just in about 30 minutes time! So far in my testing, this hourly inside candle trade works about 80% of the time, which is pretty good. Typically I will set the stop above the high of the inside candle, just in case price goes against the trade. It is important when trading this way to be aware of the hourly trend vs. the daily trend. For example today, the hourly trend was up but the daily trend is down. So I was thinking that there were more sellers waiting to sell the rallies, in order to trade with the daily trend
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