Hi readers !!! Hope, you people are doing great . I’ll be sharing some trade setup strategies today regarding trading “PIN BAR” formation & “trend trading” on which we already covered some basics few months back (learn: PINBAR strategy)and(learn – How to find a trend) Here, I’ll open up some more ideas to look at this candle formation-PIN BAR ( or any candle type you’re using) as a confirmation trick for better trade success.We’ll see how a trend ends it’s journey,how we understand it’s changing behavior & how to start trading with a fresh start-up trend with PIN BARS.
First of all, We’ll look for clear trend formations in a chart while trading . A chart having more swings as higher-high & higher-low(for uptrend) AND lower-high & lower-low(for downtrend) is a better chart to trade for us.So, we’ll always trade with the trend.
In below chart, price was trending down with lower-lows & lower-highs(marked with red circle as lower highs) & we were looking for price action sell signal on every pullback towards 20ema,flip resistance or prior lower high swing area.So, we’ll be in this sell hunting mode till we don’t see the lower-low & lower-high pattern gets broken.
HOW shall we confirm the break of this on-going downtrend pattern then ??? We must see price trading above the LAST LOWER-HIGH SWING level as a first hint of this break of existing downtrend pattern & possibility of starting of a reverse trend(uptrend for here) or a flat market and exactly the same thing happened on below chart when price closed & started sustaining above 5010 level of prior lower high swing level of this existing downtrend. While breaking the existing downtrend pattern, we can see price already formed a new higher low on it’s move up which confirms a possible start of an upcoming uptrend. So, our support levels are set on chart on 5010 level & we’re simply looking for a price action buy signal there to join the newly started uptrend. Finally we got a PIN BAR buy signal on our desired level & ready to hit a buy entry now. While trading the PIN BAR , you need to see the criteria we discussed in ADVANCE PRICE ACTION COURSE lesson in member forum regarding trading “pin bar & rejection bar” contents for it’s size & gain-loss ratio.Those criteria must match while trading PIN BAR as “we don’t trade all pin bars though formed at a right level” if those criteria are not met.
Luckily while writing this article, we got the same setup discussed above, happening in a stock called “jswenergy” .I’ve shared this trade setup in blog on15.09.2015 – have a look(though I didn’t mark swing points & explanations there as it was secret for the members till then – but now it’s on public!!!) Have a look :
In below chart, 79 is the last lower-high swing level for the stock it formed while moving in a downtrend with lower-high & lower-low(lower highs are marked in RED). Currently we can see, price is trading well above the prior lower-high swing level & it formed a higher low while it moved up around 65 area. Now, the last thing is, we got a good PIN BAR rejection from it’s breakout flip support area of 79 (learn : FLIP level strategy)which was a prior resistance & this PIN BAR fulfills all our criteria like “gain/loss ratio analysis of a pin bar & size measurement of a PIN BAR based on corrective & impulse move” – 2 important topics covered in ADVANCED PRICE ACTION COURSE. So, till now we have a long position in this as this setup is holding a high probability of running up from here.Since we’re trying to catch the setup on a point of trend reversal here, i’ll love to ride the entire uptrend if it starts from here & how to do that ??- we’ll talk about this on some other article maybe.
Now, which are the situations on chart when we’ll not trade the same formed setup we discussed above even though there is a trend build-up & a good buy formation – all in place like above charts. I’m posting a few charts below to give you the hints – let’s see you’re able to find it or no. If you got all my points in above discussion regarding what we’re really watching for to open a TRADE based on trend & PIN BARS, then you should be able to analyze below chart too.To make it easy for you, i’ve posted the chart which i shared for ADVANCE PRICE ACTION course members,but i have hidden the write-ups to see how you read it. I’ll send you the full chart with write-ups in your mail once i see your analysis over these charts.
(1) CHART-1 :
price formed a higher low & then a PIN BAR buy signal on the flip support, but still it didn’t play out – WHY ??
(2) CHART-2 :
The 2nd PIN BAR played out successfully & this chart is a continuation of chart-1 shared above. WHY the 2nd PIN BAR buy signal got success ??
(3) CHART-3 :
Price has broken & traded well above prior lower-high swing resistance which confirms a “BREAK OF EXISTING DOWNTREND” as we discussed at the starting of this article,but still the PIN BAR didn’t work out which formed after confirming a break of existing downtrend ? WHY ??
If you’re still confused to understand the “change of trend behavior” after this article & in a trouble to answer the charts above, i’ll suggest you to read one of my article where i discussed how a trend changes it’s up or downtrend using an example of trading nifty for 7 years.Here is the article :Transformation of TREND ( ENDING & REVERSING )
Now below is the updated chart of PIN BAR buy signal i shared to explain price action at the start-up of this article where we see price hitting our expected target area later. “We see some more things using intraday timeframes too to confirm the price action entry in DAILY chart ” and this part i did not discuss here yet & will cover in next few days hopefully. Checkout the final chart here below :
Finally, I thought about this process of sharing this article with you so that you can grow as a genuine”price action trader” and start to “communicate with price & read it” instead of trading a PIN BAR or SUPPORT-RESISTANCE only. “PRICE ACTION ANALYSIS” is just not about trading a particular candle formation like PIN BARS & others, trading support-resistance or trading price patterns like head-&-shoulder, ascending-descending triangle,double top-bottom etc. PRICE ACTION TRADING is beyond all these commonly used tools & more about reading the overall price action context & understanding overall story happening in chart with a broader view. I receive mails people asking me ” shall i trade this pin or this flip-support ” ?? But no-one mails me showing “price action context/story on chart” as no-one is trying to see that.When you start reading “price action behavior on chart” & start communicating with overall price movement, all those support-resistance,candles etc becomes secondary for your price action analysis & from there you emerge as a genuine “PRICE ACTION TRADER”.
Finally as i believe, READ price momentum context – RECOGNIZE the pattern going on – TRADE the pattern till it ends and to learn it all join me in my MEMBER FORUM & trade with me realtime using higher & lower timeframe charts.