Hello, my friend, and welcome to this tutorial on Pin Bars – Japanese Candlesticks Pattern, Part 1. In this post, we will discuss Pin Bars and what you need to know about the meaning of Japanese candlesticks today whether you’re a beginner or an expert. Enjoy!
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Pin Bars – Japanese Candlesticks Pattern, Part 1 – Video
Hello friends, it’s Barry Burns from Top Dog Trading. Today, we’re going to focus on candlestick patterns, specifically pin bars. So, let’s start by defining a pin bar. It’s a pattern that looks like a candlestick, and it can go in both directions, but we’ll discuss a bullish pin bar today.
A pin bar has two essential criteria. First, it must have a wide range from high to low, but this range should be relative to recent price activity. If it’s a narrow range compared to recent market activity, it doesn’t qualify as a pin bar. The second criterion is that the open and close, the real body, must be at the top of the range. Whether the real body is red or green doesn’t matter much, as the real body is narrow enough that color becomes inconsequential.
Defining Pin Bars – Japanese Candlestick Patterns
Now, what does a pin bar signify? Essentially, it indicates that the market has rejected lower prices. Imagine the market coming down, testing various levels, and at the end of the period (e.g., a day), it opens and closes at about the same high level, rejecting the lower values within the wick. This is termed a rejection of value in market profile terminology.
This rejection signifies that although the market tested lower prices, by the end of the period, it did not find value at those levels. Participants, through their buying and selling decisions, communicated that they considered the higher price more appropriate. Remember, the market is essentially an auction place, and the value is determined by what participants are willing to pay for it.
Time for a Little Exercise on Pin Bars- Japanese Candlestick Patterns
Now, let’s introduce a pin bar and have a little quiz. What do you think the market will do next? Will it go up, down, or sideways? Comment down below and let’s see what happens.
In the example provided, the market initially goes up after the pin bar. However, it soon retraces, and another pin bar forms. If one had placed a buy and set a stop below the low of the pin bar, they would have been stopped out. This scenario illustrates that while pin bars provide logical information, they are not foolproof indicators.
Wrapping up! – Japanese Candlestick Patterns
Candlestick patterns like pin bars are ancient and have been used for centuries. However, relying solely on them might be limiting, as they are just one piece of evidence. It’s crucial to seek multiple pieces of evidence before making trading decisions.
Stay tuned for part two, where we’ll explore additional factors and evidence needed for successful trades. Also, I have a gift for you: the Rubber Band Trade strategy, a complete trading setup. Click on the eye icon or check the description for the link. Enjoy, and look forward to part two!
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