Tag Archives: outside-bar

Further weakness in the Swiss Franc?

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An outside bar setup has formed on Swiss Franc futures this morning. Combined with the some fundamental knowledge, it looks like the Franc is heading lower. This is a with the trend setup however my gut feel is that this trade will not go far so tighten targets. The signal on this outside bar is actually to go long because the bar has closed higher than the previous day’s high. I have low confidence in this trade but I’m interested in how it will turn out.

Here’s the daily chart:

Outside bar, higher close in a downtrend

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Outside bars formed on stock index futures

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Scanning my daily charts here early on a Friday morning and I have noticed many outside bar, higher closes on the daily charts in the direction of the trend. Trading with the trend should make them high probability trades. Some examples below:

ES Outside bar

YM Outside bar

NQ Outside bar

I also noticed on the same day a setup with the trend on Copper Futures.

Long term trend in copper

Outside bar setup on the daily chart

I will be monitoring these pretend trades over the next few weeks to see how they do. Any comments?

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Outside bar setup in Gold Futures

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I was having a browse through my daily charts looking for Marting Pring setups, particularly the Outside bar setup and discovered a series of them after the peak in Gold in early December 2009. I’m not sure I would have taken these setups as they are but they are useful to note because they could be used for scaling in to a position. Here’s the chart (click to enlarge):

Series of outside bars in Gold

Every one of those outside bars fully encompasses the trading range of the prior bar and they all close lower than the previous bar’s low which is a good indication of the direction of the price. This particular trend did fizzle out pretty quick because of the long term up-trend on the monthly chart (probably). Here’s the monthly at May 2010 (with a log scale):

Monthly trend in Gold with an outside bar highlighted

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Outside Bar setup

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I have just read Martin Pring’s chapter on outside bars in Martin Pring on Price Patterns and I thought I’d have a look through my charts to try and find this pattern; it didn’t take long. The idea is if the high and low of a bar exceed the previous bar’s high AND low, then we have an outside bar. What we want for a break lower is to see the bar closing in the lower third of the bar, and vice versa for a break higher. Even better is for the close of the outside bar to below the low or close of yesterday’s bar.

Outside bar, lower close example

On the S&P 500 futures (ES) a nice outside bar at daily resistance formed. Martin also mentioned that these short patterns should be used with confluence with other things so that the weight of the evidence indicates the market direction. Remember that these patterns are lower probability when considered on their own. Have a look at the ES Daily chart ending on 24-May-2010.

ES Outside bar, lower close

Confluence

Looking at the monthly chart, we are at the 61.8 retracement where price will likely hit some resistance. This level also happens to be support from July 2008 and looks to be resistance now in April 2010.

ES Monthly May 2010

Taking the daily chart short from 1182 from 30th April with a stop above the high of that bar gives us a nice setup. This is all in hindsight of course, but I find it interesting that a setup with confluence delivered the results.

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