Can sediment trap extend inside wall?

[NowhereMan]

I'm installing an outdoor tankless water heater, which is recessed into the wall. The vertical space is tight, so a sediment trap on the propane line would have to extend into the wall cavity. I've spent a while Googling, and can't find any reason why this would not be allowed. In any case, I was wondering what you experts might have to say. Thanks.