Daily Range Inside Bar Breakout Strategy

Family: breakout · Regime: trending · Complexity: medium · Asset classes: FX, Equity Indices, Commodities · Timeframes: H1, D1

Thesis

Price breakouts are most reliable when they occur in the direction of the historical bias (Candle Count) and are preceded by a period of energy storage (Inside Bar). By entering only after the previous day's high/low is breached and momentum is confirmed, we exploit the 'continuation' effect where breakout players and stop-losses from the previous day provide liquidity for the next leg.

Components

• Candle Count History (regime) — Establishes the 'structural' bias based on historical frequency of bull vs bear closes across the entire dataset.
• Daily High Low MTF (direction) — Defines the daily range boundaries; a breakout of the previous day's high/low provides directional bias.
• Inside Bars (MTF Framework) (entry) — Identifies a volatility contraction (coiling) immediately after a breakout or at key levels to time the entry.
• Ichimoku Kinko Hyo (exit) — Used as a trailing exit mechanism (Tenkan/Kijun cross) to capture trend extensions while protecting gains.
• Nadaraya-Watson Envelope (EMA Proxy) (risk) — Provides a dynamic volatility-adjusted stop-loss and baseline for position sizing based on recent standard deviation.
• Momentum (MOM) (confirmation) — Filters out 'stale' breakouts by ensuring the rate of change is still positive/negative in the direction of the trade.

Known failure conditions

• The asset enters a persistent doji-heavy regime where Candle Count History loses skew.
• Price oscillates repeatedly around the Daily High/Low levels without sustained movement.
• The Inside Bar breakout occurs with Momentum moving in the opposite direction.

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