CPM

Introduce with Pinbar

We use candlestick charts because they show the price action the clearest and are the most popular charts amongst professional traders. Many traders prefer the candlestick version over standard bar charts because it is generally regarded as a better visual representation of price action. If we concentrate on the candlestick chart candle we will see some special candle. Pinbar is one of them special candle which gives us a better reversal trading signal.

What is a Tailbar/Pinbar?

The actual pin bar itself is a bar with a long upper or lower “tail”, “wick” or “shadow” and a much smaller “body” or “real body”, you can find pin bars on any stripped-down, “naked” bar chart or candlestick chart. Please see below the perfect formation of the Pinbar.

The pin bar formation is a price action reversal pattern that shows that a certain level or price point in the market was rejected. Once familiarized with the pin bar formation, it is apparent from looking at any price chart just how profitable this pattern can be. Let’s go over exactly what a pin bar formation is and how you can take advantage of the pin bar strategy in the context of varying market conditions.



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How to Identify a Tailbar/Pinbar

  1. The pin bar should have a long upper or lower tail…the tail is also sometimes called the “wick” or the “shadow”…they all mean the same thing. It’s the “pointy” part of the pin bar that literally looks like a “tail” and that shows rejection or false break.
  2. The area between the open and close of the pin bar is called the “body” or “real body”. It is typically colored white or another light color when the close was higher than the open and black or another dark color when the close was lower than the open.
  3. The open and close of the pin bar should be very close together or equal (same price), the closer the better.
  4. The open and close of the pin bar are near one end of the bar, the closer to the end the better.
  5. The shadow or tail of the pin bar sticks out (protrudes) from the surrounding price bars, the longer the tail of the pin bar the better.
  6. A general “rule of thumb” is that you want to see the pin bar tail be two/thirds the total pin bar length or more and the rest of the pin bar should be one/third the total pin bar length or less.
  7. The end opposite the tail is sometimes referred to as the “nose”
Please see below the anatomy of a pin bar

Formation of Pinbar

Bullish(Buy) Reversal Pin Bar Formation
When the Pinbar's Tail Point forms in down and body prints on up then it would be the Bullish(Buy) Reversal Pin Bar because its tail confirms the rejection of lower prices or support. See below a perfect example of Bullish(Buy) Reversal Pin Bar.

Bearish(Sell) Reversal Pin Bar Formation
When the Tailbar's/Pinbar's Tail Point forms in UP and body prints in Down then it would be the Bearish(Buy)) Reversal Pin Bar because its tail confirms the rejection of higher prices or resistance level. See below a perfect example of Bearish(Buy)) Reversal Pin Bar.

So I think now you can identify the Tailbar/Pinbar in the Candlestick Chart. Stay with us to know how to trade with Tailbar/Pinbar.

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