One of the great features of pullback indicators is that they will often appear along side other pullback indicators. This reinforcement by other established strategies and forex indicators further enforces your position making trades easier to execute the more you are familiar with the various pullback setups.
Firstly what is a Pinbar candlestick?
A pinbar candlestick describes the appearance of the candlestick, basically it looks like a pin. The tail of the candlestick is very long compared to the body of the candlestick.
The rule for our strategy is that one of the tails is at least 3 times longer than the body. The tail length is important, the ratio of the length of the tail to the body is proportional to the significance of the tail.
Obviously it does not matter if the bar is white or black, and in the strategy it does not really matter either, however the direction of the tail is somewhat significant in that it can give clues as to direction in some cases but not all, so the direction of the tail does not matter, but does usually give an idea of direction.
Where does a pinbar candlestick appear and how do I use a pinbar candlestick?
The strategy is that a pinbar appears before a trend or direction change. It is most commonly used by scalpers in a pullback situation. Any time frame can be used and scalpers will often use a tickchart instead of a regular time frame.
Why does a pinbar candlestick work as an indicator?
A pinbar appears because during the candlestick timeframe, a change in momentum has occurred. For example… at the start of a time frame there may have been a strong selling burst, but midway through the time unit, there were more buyers than sellers, and so the price changed. For the price to change against strong selling means that the buying was much stronger, and so in general a reversal is occurring.
Strategy for pinbar candlesticks?
Try to avoid acting on a pinbar during flat trading, however during trending in either direction a pinbar is significant and indicates a reversal. It is especially common during a stepping trend with many pullbacks.
please comment about using a pinbar candlestick.