Reasons Why Pin Bar Setups Fail

27 thg 8, 2013

Reasons Why Pin Bar Setups Fail

hoàn toàn với mục đích chia sẻ, nhiều thứ là những kinh nghiệm cóp nhặt được từ các forum, một số là kinh nghiệm bản thân

How Close Is The Pin Bar Formation to the Dynamic levels?
p/s: dynamic level là vùng dc tạo bởi một số MA chuẩn, khá có ý nghĩa trong price action (mình dùng luôn tên dynamic vì tôn trọng tác giả của bài viết này)
 A dynamic resistance/support  is the region in and around the 21ema and 8ema. To me this is one of the most important criterion to consider before tagging a pin bar formation profitable or risky. I would illustrate it using two different pairs on the daily chart.

vùng xem xét dynamic level chủ yếu vào các dùng MA của mỗi người, không nhất thiết phải hoàn toàn follow tác giả, riêng mình dùng 52-104-208 MA
về cơ bản, theo dõi price action setup đôi khi phải nhìn vào giá ở nhiều khung thời gian từ m15 trở lên, sẽ phát hiện ra được nhiều vùng giá chiến lược. base là vùng tạo bởi daily và weekly

When ever their is a pin bar formation very close to a dynamic resistance/support region, their is every tendency that the pin bar candle would fail. if you  take a look at the EURUSD chart above, you would notice  that the body  pin bar candle(bullish in this case) formed very close to the dynamic Resistance region therefore  leaving it no chance to succeed.  It is also important to note that when every a pin bar forms in the middle of no where, ie (not off a key level or a dynamic level) you have every reason to be skeptical about it

The  NZDUSD chart above goes ahead to show the reason why I said that this criterion is the most important criterion to consider when trading the pin bar formation. If we notice on the chart ,we had a fakey setup (inside bar + pin bar) form off a horizontal support level but failed. The reason  for this is simple. despite the fact that this fakey setup formed on a horizontal support level it still failed because the pin bar candle was very close the dynamic resistance region. 

Always Take a Look at Higher Time-Frames Like the Weekly Chart 
Taking trades based on the daily chart with out considering what the weekly chart has to says is more like trading with with luck. Most times when you get a valid pin bar setup on the daily chart please do well to check at least the weekly chart to see what it says. I would illustrate with two charts EURNZD and EURCHF.

By some  standards the pin bar trade setup on the daily chart above is valid and a trader would not be wrong if he chooses to take the risk of taking this a sell position on this pair. Now lets take a look at the weekly chart and see the reason why this trade failed.

While  we had a valid pin bar trade setup for a sell on the daily  chart, the weekly chart  had a bullish fakey setup formed within the dynamic support region. This signals that the bullish momentum on this pair is rather stronger and we should stay away from taking a sell position. Understanding the concept alone would  save you a lot of pains in  failed trades. Always endeavor to check the weekly chart before you take your trades based on the daily time frame to determine if  the weekly is rather against your supposed trade. When the weekly chart is in support of your trade, the probability that the trade will succeed is high.

Is The Pin Bar Formation Off a dynamic Region?

Most times when a pair is in a trend, we look out for price action setups in and out of the dynamic region. when the weekly chart is in support of our supposed pin bar setup around a dynamic region on the daily chart, then the probability of success of that pin bar is high.

In all we should understand that the market speaks a language I call “price action”. The ability for us to understand and effectively interpret what the market is trying to pass across gives us an edge. I hope this article would help you improve your trading.

copyright: swanfx