Sunday, January 26, 2014

Pin Bar Trading


Dear Friends,

The pin bar is one important & basic tool of Price Action trading. Pin bars are single candlestick bar reversal pattern. They offer excellent trading opportunities when used at support/resistances or at pivot points (or at a combination of moving averages) levels or important trend lines. They are also found in middle of up/down trends where they indicate trend continuation.

 

Pin bars are formed when main body of the candlestick is very small & has a long wick or nose (atleast twice as compared to body). Different pin bar formation are also known as Hammer, Inverted Hammer, Shooting Star or Hanging Man. The Hammer and Inverted hammer are considered BULLISH REVERSAL pin bars, while the Shooting star and Hanging man are considered BEARISH REVERSAL pin bars. Pin bars are more powerful on the daily chart, 4hour and 1 hour time frame. But can be used or study purpose on lower time frames also.

Let us focus more on today on shooting star pinbar setup. A shooting star appears after a series of moves upwards and signals a potential end of the upmove. A shooting star is seen with a long upper shadow with a small body (black or white). This candle stick tells us change in sentiment of traders. Bulls took the price to a newer high but could not keep prices at those higher levels where bears took over & hence price closed at a lower level making a small body. Volume confirmation is often required to trade on this pinbar.

Regards,

Rajen

Following are some NSE stock charts which have the pin bar formation.












For Further Reading,
Pinbar Trading, Price Action Trading, Reversal Patterns, Trading Education

1 comments:

COOOL on January 27, 2014 at 8:36 PM said...

Thanks sir for this informataive article.. this also helps when using with support and resistance.

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