very nice Artist, count with me
Pinbar & Engulfing The significance of these 2 candlestick patterns is rejection of prices. For the benefit of those who don't know what they look like, here is a textbook example. Bearish Engulfing {image} Bullish Engulfing {image} Bearish & Bullish Pinbar {image} Using these patterns in isolation can be misleading and i will explain why in the next post. These patterns are best used in conjunction with the trend and SR as they may pin point potential reversal. Moving on.. Fartist
All market movement are as a result of supply and demand
Danger of Pinbar
In my previous post i mention that trading a Pinbar in isolation can be misleading.
In my early days of trading i get very excited when i spot a bullish Pinbar. I could hear the voices in my head saying 'IT"S GOING UP!'
Well sadly more often than not it went against me and stopped me out of my trades.
That is because i was simply trading the Pinbar in isolation, which meant that i am trading against the trend on a lower timeframe.
Here are some charts to illustrate my point
On the daily chart we have a typical bullish Pinbar that get traders excited..
And on the 4 hour chart there doesn't seem to be anything bullish about it..
Can you see it now?
A Pinbar is simply a pullback on the lower timeframe. And by going long at the open of the next candle, chances are you are trading into resistance on the lower timeframe.
My point is never trade candlestick patterns in isolation.
In my next post I will discuss how i would trade the Pinbar & Engulfing Setups.
Fartist
In my previous post i mention that trading a Pinbar in isolation can be misleading.
In my early days of trading i get very excited when i spot a bullish Pinbar. I could hear the voices in my head saying 'IT"S GOING UP!'
Well sadly more often than not it went against me and stopped me out of my trades.
That is because i was simply trading the Pinbar in isolation, which meant that i am trading against the trend on a lower timeframe.
Here are some charts to illustrate my point
On the daily chart we have a typical bullish Pinbar that get traders excited..
And on the 4 hour chart there doesn't seem to be anything bullish about it..
Can you see it now?
A Pinbar is simply a pullback on the lower timeframe. And by going long at the open of the next candle, chances are you are trading into resistance on the lower timeframe.
My point is never trade candlestick patterns in isolation.
In my next post I will discuss how i would trade the Pinbar & Engulfing Setups.
Fartist
Whether you can or you can't, you are both right.
Danger of Pinbar In my previous post i mention that trading a Pinbar in isolation can be misleading. In my early days of trading i get very excited when i spot a bullish Pinbar. I could hear the voices in my head saying 'IT"S GOING UP!' Well sadly more often than not it went against me and stopped me out of my trades. That is because i was simply trading the Pinbar in isolation, which meant that i am trading against the trend on a lower timeframe. Here are some charts to illustrate my point On the daily chart we have a typical bullish Pinbar that...
All market movement are as a result of supply and demand
Tilting the odds to your favour
As you know the danger of trading Pinbar & Engulfing patterns in isolation can be dangerous and misleading.
In this post i will share with you the factors i consider before taking these trading setups.
1) Trend - I only trade these setups when i have an obvious trend going on. In an uptrend i only look for a bullish candlestick patterns and ignore all bearish ones.
2) Area - Even if you are trading with the trend, you want to trade at a area whereby the pullback could potentially end which leads the continuation of a trend. You want an area which is obvious with traders and institution watching. I define it using my Value Zone and Support Resistance. The more obvious the better.
3) Momentum - You want momentum leading up to the area of interest. Why? From an order flow perspective (for longs), you get momentum as offers are being hit aggressively or as offers are being pulled away. When offers are being hit aggressively, chances it will tend to slow down in front of an important area. Because those who are looking to short could possibly be placing heavy offers or looking to hit the bids at that area. So at this junction, you have longs who are in profits and shorts who are ready to slam the market the other way.
If you are long what would you do? Chances are you will start trailing your stops or take profits at the important area. Either way you have longs who will drop the ball at the first sign of trouble. And when you have longs who are jittery and people looking to short because they are with the trend, you can expect momentum to reverse to the downside as quickly.
4) Swing H/L taken out - If i'm looking to short, i like to see previous highs taken out before forming a bearish reversal pattern. Why?
The highs will be obvious and many traders & institutions will pay attention to it. They will either look to long on breakout or short at the high. So when price does trade above the high only to come back lower, what does it tell you? Those who long on breakouts are losing and those who went short are earning.
And logically those longs would have their stops placed below the highs which usually trigger further downside momentum.
5) Size - I want the candlestick pattern to be larger relative to the prior few candles. The longer the wick the stronger the rejection! Objectively i need the candlestick to be at least 1.5 times ATR.
Some charts to illustrate my point..
Let me know if anyone has any questions.
Fartist
As you know the danger of trading Pinbar & Engulfing patterns in isolation can be dangerous and misleading.
In this post i will share with you the factors i consider before taking these trading setups.
1) Trend - I only trade these setups when i have an obvious trend going on. In an uptrend i only look for a bullish candlestick patterns and ignore all bearish ones.
2) Area - Even if you are trading with the trend, you want to trade at a area whereby the pullback could potentially end which leads the continuation of a trend. You want an area which is obvious with traders and institution watching. I define it using my Value Zone and Support Resistance. The more obvious the better.
3) Momentum - You want momentum leading up to the area of interest. Why? From an order flow perspective (for longs), you get momentum as offers are being hit aggressively or as offers are being pulled away. When offers are being hit aggressively, chances it will tend to slow down in front of an important area. Because those who are looking to short could possibly be placing heavy offers or looking to hit the bids at that area. So at this junction, you have longs who are in profits and shorts who are ready to slam the market the other way.
If you are long what would you do? Chances are you will start trailing your stops or take profits at the important area. Either way you have longs who will drop the ball at the first sign of trouble. And when you have longs who are jittery and people looking to short because they are with the trend, you can expect momentum to reverse to the downside as quickly.
4) Swing H/L taken out - If i'm looking to short, i like to see previous highs taken out before forming a bearish reversal pattern. Why?
The highs will be obvious and many traders & institutions will pay attention to it. They will either look to long on breakout or short at the high. So when price does trade above the high only to come back lower, what does it tell you? Those who long on breakouts are losing and those who went short are earning.
And logically those longs would have their stops placed below the highs which usually trigger further downside momentum.
5) Size - I want the candlestick pattern to be larger relative to the prior few candles. The longer the wick the stronger the rejection! Objectively i need the candlestick to be at least 1.5 times ATR.
Some charts to illustrate my point..
Let me know if anyone has any questions.
Fartist
Whether you can or you can't, you are both right.
- | Joined Aug 2014 | Status: Member | 7 Posts
Hi Fartist! Hi friends! I'm Davide from Italy. I really appreciate the way you study the market and your trading strategy.
It fits very well to my ideas! For this reason here i am in your thread, ready to cooperate and ride the trend without limits.
Have a nice sunday guys
It fits very well to my ideas! For this reason here i am in your thread, ready to cooperate and ride the trend without limits.
Have a nice sunday guys
This week's Market Analysis here.. http://www.youtube.com/watch?v=rmENvnlLo2U
Thanks for the analysis, good to have confirmation of ideas going forward!
Couple of things, with the boon analysis thats quite a pullback you are looking for, wouldn't you say if price did pull back that far and took out the previous swing low the trend would be starting to look weak.? The area I am looking at is in green in my screenclip, your area is red.. interested in how you view that..
Also, looking forward to hearing how you decide to get out of a trade - or did I miss that in the thread somewhere?
Here's to another good week catching some trends and building positions!!
Callum
