I agree. I have wondered about this in the past. I then decided to treat a 2BR as it is and not to combine it. But i have seen dudest combine it all the time, so maybe there is a science to it. Wish dudest will give his take on the matter. On another note I do not think a 2 BR is a weaker signal to a pin bar …
And there is nothing wrong with combing candlesticks, as often times a 2BR does form a pinbar on a higher timeframe. But you don’t want to be looking at a 2day candlestick on a 1 day chart. By looking at a proper 2 day chart to combine a 2BR into a pinbar, you are looking at all of candles at the same level, and in proper price/time context.
I’m not talking about any specific person or thread. I have followed quite a few PA threads and I’ve seen it on all of them. It’s really not that big of a deal, it’s just another small thing to keep in mind to maximize your trading edge.
Reflection about Pin Bars:
I just noticed that when it is said that no matter the color of the PIN BAR to indicate the possible future direction I agree, however, I think you should consider that for the BAR PIN is within the previous candle, except for the DOJI which basically have no body, the body of the BAR PIN should ALWAYS be the opposite color to the prior candle. It may be obvious but if I’m not wrong, this may help some to identify a valid PIN BARs.
Best Regards,
Hi Chisha,
Thanks for your explanation. I got it. It’s all about the open and close within the previous candle thing. Why do I always have to omit a major rule ???
A chart would be great to illustrate the rest of your explanation.
Cheers,
Yves
[QUOTE=“krugman25;527953”]<img src=“301 Moved Permanently”/>
I wanted to offer a little thought into mentally combining candlesticks. I think there is a bit of added risk if it isn’t done correctly. I’ve never actually seen this addressed by anyone before, but I think it is still important. When your trading price action, your not just looking at what candle shapes form, but your also looking at price movement over time. For example it’s good to have a pinbar at a key level but that’s not everything. What if the pinbar is 50 pips long, and the previous candle is 400, well that changes everything because now we have a price/time perspective. You would most likely pass on that kind of pinbar.
The problem I see with people combining candles is that they are combining 2BR, BEUB or BEEB but they are not combining all candles on the chart, and thus losing that price/time perspective. If you just combine a 2BR, then you are essentially doubling the amount of time and hence price movement for only 2 candles. So you are really giving a false view of the quality of that price action signal. There are charts out there that will combine all candles, and give a good proportional view, I’m not talking about those. I see a lot of people mentally or on paper combining price action candles, which can skew the quality of the candle if not done correctly. This is why a 2BR isn’t the same as a pinbar. A 2BR reversal is a weaker signal because it took that 2nd time period for price to fall back, signalling a less aggressive pullback in price. If you want to increase time periods to create the pinbar, then you need to do it for all candles on the chart. I added a chart to illustrate my point.
I would be curious to other peoples ideas about this.[/QUOTE]
Excellent insight. Logical and very concise. Why single out two or three candles and blend them, whilst leaving all others at the original time frame…this skews what is really happening and I think it plays into another key aspect of trading. If you find a setup on the daily chart, don’t look at the hour or monthly to determine how to execute the trade. If a setup is found on a daily, I use the daily only to manage the trade. Thanks for sharing this!
But aren’t 2BR a valid signal by their own already? I thought blending them to create a pin was just a way to help us visualize.
Krugman,
I’m also confused here. From the beginning of this thread Johnathon himself has talked about candle blending and he’s talked about blending the 2 bar to form a pin bar but as an example if a 2bar reversal has formed on the daily chart are you saying that it’s a problem to only combine the 2bar without combining the rest of the candles? & you said the 2bar is weaker than a pin, aren’t they really the same thing?
There are 2BR signals that can be combined, and it is something that I very often do. But you have to realize to create that 2BR you have to double the timeframe for the entire chart, not just the 2 candles you want to combine. If there were 2 identical setups on the daily but 1 was a pinbar and the other a 2BR. The pinbar is the better. Someone might say “well Krugman if you just combine the 2BR it makes the exact same pinbar” and hence the same setup, but the moment you combine 2 candles on a daily chart, you are now looking at a 2 day chart. With timeframe being equal a pinbar is better than a 2BR, which should make sense because your saying it took twice the time to produce the pullback with a 2BR versus a pinbar. You could take it a step further and look at a 3 candle setup. The morning star isn’t used here, but it’s good for example. A Morning star, when combined creates a pinbar. But a Morningstar is weaker than a 2BR because it took 3 candles to create the same price pullback that a 2BR does in 2 time periods, or that a pinbar does in one.
But that’s just looking at the price pullback of a candle, candles also give other hints about the market, For example a 2BR and an engulfing bar are both 2 candle setups. But the Engulfing is a more powerful signal than a 2BR because with an EB price initially went higher and closed lower than the previous, which shows a stronger price rejection than just a 2BR.
Sorry for being too wordy, but I don’t want to be misunderstood. I wasn’t saying don’t combine candles, this is something I do regularly and most price action traders do. I am saying when combining candles, do it in a way to keep the price action signal in proper context with the rest of the chart.
If you are wanting to contribute to this thread please go and read the first post and post charts with no indicators.
Hmmmm, interesting…
Just because one reversal may take longer to form will not necessarily make it weaker or any less potent than another. What you are basically saying is because a 2 bar takes longer to form then it will not be as strong as a pin that forms over one session. But really it does not matter if one reversal takes longer they are both showing that they had the same order flow behind them to create the reversal. Whilst I agree 100% about what you are saying with the 50 pip and 400 pip example and not wanting to trade small against large etc, the time is something that to be honest I don’t.
Here is an example; How often to we see a pin bar or a 2 bar form and then see a bunch of stalling with indecision candles and inside bars etc etc This is the market getting ready for the market to reverse and when we are dealing with reversal signals you have to remember that the order flow has to change hands and this is going to take time a.
In other words; the bulls may be in full control. The orders are going to have to change in the market for the bears to gain control and this will have to tip to the point where the market will reverse. This can take time. Just because it takes more time than others does not make one signal stronger than others and this is often why we get inside bars and indecision candles after reversal signals.
The reason it is a super common occurrence for price to fire off reversal signals such as 2 bars/pins etc and then stall before then finally then moving to become a winner is because of this need for the orders to change hands.
Johnathon
We don’t trade the last 2x 4hr candles on any intraday trades until the UK market has opened for the week.
You will notice a lot of small reversal candles at the end of the week on the 4hr candles. This is because traders take profit to close their trades. This can suck traders into trades as others are leaving the market. What normally happens is these fake reversal candles form and others get sucked in. The market will open next week and the traders who got out will get back in and the market will continue stopping out the traders who got sucked in.
Of course it does not always work like this, but as we always say “It is always better to be out and wishing you were in, then in and wishing you were out”! It also saves you from huge gaps and the massive spreads at the start of the market open Monday morning. So there is a ton of risk for not much gain.
Hey guys. What did u all think about eurchf and usdjpy d1 beeb? Sorry I cant attach images because I am using mobile phone now.
I am looking at uj for a short right now, but i don’t trade e/chf i only have 10 pairs on my radar .
Hello guys. It seems to me that a 2BR has formed on GOLD D1. It is also at a swing low? (Not sure). Sorry I can’t post photos cause I’m using mobile too
I was thinking to short the USD/JPY as well however I have a hard time deciding my entry point below the wick is already too low I guess
any suggestions ?
Mondays have allot of fake outs because is the beginning of the week, i usually wait until Europe opens. Nothing wrong with being patient , there are plant of opportunities ahead. Be like a snipper , wait for a clear shot.
Thanks Johnathon,
So basically, to sum it up, we don’t trade on a NFP Friday at all, right ? Because first 4x 4hr Candles would expose us to high volatility and the last two are the ones you just mentioned.
Cheers,
Yves
Would it be much to ask to share this clear shot once you see it so I can learn as I grow ?
Cheers mate and thanks
[QUOTE=“Forex School Online;528169”]
Hmmmm, interesting…
Just because one reversal may take longer to form will not necessarily make it weaker or any less potent than another. What you are basically saying is because a 2 bar takes longer to form then it will not be as strong as a pin that forms over one session. But really it does not matter if one reversal takes longer they are both showing that they had the same order flow behind them to create the reversal. Whilst I agree 100% about what you are saying with the 50 pip and 400 pip example and not wanting to trade small against large etc, the time is something that to be honest I don’t.
Here is an example; How often to we see a pin bar or a 2 bar form and then see a bunch of stalling with indecision candles and inside bars etc etc This is the market getting ready for the market to reverse and when we are dealing with reversal signals you have to remember that the order flow has to change hands and this is going to take time a.
In other words; the bulls may be in full control. The orders are going to have to change in the market for the bears to gain control and this will have to tip to the point where the market will reverse. This can take time. Just because it takes more time than others does not make one signal stronger than others and this is often why we get inside bars and indecision candles after reversal signals.
The reason it is a super common occurrence for price to fire off reversal signals such as 2 bars/pins etc and then stall before then finally then moving to become a winner is because of this need for the orders to change hands.
Johnathon[/QUOTE]
Great points made! I believe you have me convinced sir, haha. In the case of an engulfing bar over a 2BR, I do still prefer that setup. In that case it’s how it is showing the market had enough strength to break previous days lows and close somewhere nearby. It seems to have that extra umph over the 2BR.
To the original reason for the post, do you believe combining only 2 candles on an entire chart skews the overall picture. It is like taking a higher timeframe candle and putting it on a lower timeframe chart?
Thank you for the thoughtful and engaging response.