Master Bars

A master candle or master bar is a candle that makes a recent high or low and has a higher high and lower low than the next 4 candles.

                                     





The high and low of a master candle creates boundaries also referred to as support and resistance areas. When the support or resistance line is broken (price extends above or below the boundaries) the trend is expected to continue in that direction.
 
Trading master candles is very simple as we wait for a master boundary to occur and then wait for the boundaries to be broken. 

Master candles are based on consolidation. Usually after a strong trend movement price will consolidate for a period of time before starting a new trend. The longer the price consolidates the large the next move is expected to be.

Master candles are a form of a breakout setup as they wait for price to “breakout” from its current consolidation pattern. Breakout trades by nature are susceptible to false signs as price might spike up above the high only to close back in the consolidation pattern. One way to reduce these false signals is to wait for the candle to close above the high boundary or below the low boundary before entering.