Direct from the desk of Dane Williams.
When you first discover my strategy, it might seem like Master Candles are a unique concept.
But if you simply zoom in to a 5-minute chart, you'll find that they are nothing more than a fun variation on forex inside bars.
A Master Candle, for those of you who haven’t been listening to me prattle on here on INLEO, is a candlestick pattern occurring on the one-hour (H1) chart.
It's characterised by having a high and low that engulfs the subsequent four H1 candles.
In essence, it is a candle that encapsulates all price action over a period of time.
Try it.
Take a closer look at a 5-minute chart and the true nature of a Master Candle will quickly become apparent.
What you’ll see by zooming in on a Master Candle is an intraday range – the price movement within the specific timeframe before a breakout.
This concept may initially appear different from inside bars, but let's explore how they are interconnected.
You see, just like a Master Candle, when you encounter an inside bar, it presents a moment of pause in the price action.
The resemblance is there, as both indicate a temporary equilibrium between buyers and sellers.
However, there are also nuances that set them apart.
An inside bar, by definition, is a two-candle pattern where the second candle's high and low are confined within the range of the preceding candle.
It signifies a period of indecision, where the market is gearing up for a potential move.
On the other hand, Master Candles, as I’ve discussed earlier, encompass a more extended timeframe.
That being exclusively the price within a single one-hour candle.
They emerge as a single candle that engulfs the high and low of the subsequent four hourly candles.
Even though they’re the same, this indicates a period of consolidation on a much larger scale than a humble inside bar.
So as you can see, the primary distinction lies in the timeframes they represent.
Inside bars reflect short-term indecision and potential breakouts, while Master Candles offer a broader view of consolidation over a much longer period of time.
In the grand scheme of your overall trading strategy, the theory behind Master Candles and inside bars complement each other nicely.
They each represent different timeframes and facets of price action with their connection acting as a powerful indicator for your trading.
By recognising their coexistence and understanding the interplay between these chart patterns, you can gain a more comprehensive view of market dynamics.
Something which is obviously essential for making trading decisions that will make you money over the long term.
Just to reiterate my point, Master Candles can be seen as a variation of inside bars.
Just with more price action to focus on and therefore help in making the right call.
They not only help in identifying potential trading opportunities but also provide a roadmap for making informed decisions, encompassing entry/exit points and risk management levels.
So, if you're looking for a pattern or strategy to streamline your trading in either the crypto or forex market, Master Candles may be just what you need.
Give them a go.
Best of probabilities to you.