Please, I would like to know how to confirm that a pin bar setup is likely to reverse or break though at high probability areas.
How can you confirm from the candles before the pin bar or is there any other way?
In my opion there isnt a way to confirm price action other than future price action.
Another words instead of trying to predict the end result of current price action patterns, wait for future price action patterns to confirm your initial analysis prior to making a trading decision.
Confirmation > speculation
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I like pin bars and I look for them at support and resistance levels all the time.
I don’t think you can predict something before it happens, however once price is approaching a strong support or resistance level I will start to look for certain price action candles to determine if price will retrace off that level or whether that level fails to hold and a break out occurs.
With regard to pin bars there are some simple rules. I expect the price to break that support or resistance level by at least 3 pips and then close below resistance or above support. I also need that pin bar to close in the upper or lower 1/3 of that candle. Before I even consider a trade I then want to see a strong candle away from support or resistance, a candle that opens and closes with very very small or no wicks.
Even then I normally wait for a second test of that support or resistance and once that second test fails then I will look to enter.
Pin bars in the middle of a trend are meaningless. So watch the charts dummy trade a few setups and you will get a feel for what is a good setup and what isn’t.
If I get an opportunity next trading week and I take a trade using a pin bar I will post it so you can see what I am trying to explain to you.
Just remember nothing is a certainty in trading.
Cheers
Blackduck
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The problem I have with waiting for a confirmation after the pin bar is the move might be a very large engulfing candle that ends very close to the next high probability area and I would have missed the trade. I was thinking of using the momentum of the candles before the pin bar to measure how strong the pin bar move is.
The thing I’m trying to confirm is not the direction exactly, but I’m trying to confirm the strength of the pin bar so I don’t get in too early, cause fromy trading I’ve seen the pin bar form but then it kind of goes sideways at the level or area.
I don’t understand this confirmation of a pin bar marlakey.
The pin bar is a pin bar because it bounced of some support (resistance) - that’s why the long wick.
Follow through when it takes out the high of the pin is all you need as confirmation - but it must do it within one bar - after that it’s not longer valid.
That’s my take on it anyway
Trying to add even more levels of safety means you’ll probably miss half the move.
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Sometimes after seeing the pin bar form how you want, and you set your orders at the high of the pin bar, price could start consolidating at that area and trigger the order by breaking the highs, while still coming back down and sometimes triggering the stop set at the lows of the bar. That is why I’m trying to know how to not get into a pin bar that might have consolidation after.
So I take it you would not trade a pin bar even though they can be one of the best signal bar you can get. Correct???
Blackduck
You are correct - that’s trading in a nutshell. No certainty we need to get used to that.
If you go to my blog (via my profile) there is one post on Harami pin bars - you might find it of use.
However I use daily charts and have no idea how the harami pin bar thesis works intraday.
Oh contraire - I use them alot - but with a couple of filters I would not consider confirmation.
How about when you see such a set up take a screen shot and post it with you comment as that would make answering your question a little easier.
Cheers
Blackduck
Show me!!
Blackduck
Didn’t even know you had a blog. And it is called??
Blackduck
It’s good to see a nice symetrical v shape forming after the pin on support/ resistance
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Something like this. After the inverted pin bar showed, it’s possible to open the trade there, but from seeing everything that happened, it was too early. How can you be a able to at least know that?
That’s for a reversal setup right?
Yes I guess , though this is relevant on different candlestick timeframe s
The bar indicated suggests a bearish continuation but it isn’t a pin bar or a shooting star as such because it occurs in a downtrend.
Not surprising that a continuation candlestick does not precede immediate dramatic price action.
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I respectfully disagree with @tommor. This bar is not only a pin bar but it’s also a fakey - the long inside bar set up was triggered but then reversed.
The confirmation needed was simply breaking the low of the bar the very next day (if the bars low wasn’t broken next day in my book the signal is no longer valid)
Thre are two ways to trade this.
The first - the way I trade - I would have been out after bar 4 when the lower daily high was violated. The trade would have basically been a scratch trade.
The second, if you were to use a wider stop first at the high of the pin and then at the pivot highs trailed downwards until stopped out.
The latter you would have had an okay trade but would had to wait a while for it to come good.
Either tight stop exit earlier, wider stop wait longer.
No need to confirm anything which is not possible anyway