2 Things to note when trading with Pin Bar (Part 5)

2 Things to note when trading with Pin Bar (Part 5)
2 Things to note when trading with Pin Bar (Part 5)

Pin Bar is one of the most famous price patterns in trading. There are many articles about Pin Bar with extremely diverse and rich trading methods. However, to make profits safely, you need to note 2 things before trading with Pin Bar. When you encounter those cases, you will know what the right solution is.

Note when trading with Pin bar and Trendline

Usually, Price Action traders rarely use the trendline because that makes their strategies simpler. However, those traders may miss some important price levels in the market which can only be seen after drawing a trendline.

Although horizontal support and resistance levels are stronger and more useful than trendline, it is still useful when used to identify Pin Bar setups.

A broken trendline tells us that the trend is weakening. It doesn’t mean that the market has ended the trend. But you need to focus your attention when trading with Pin Bar after that breakout.

For example

Bearish Pin Bar price action analysis
Bearish Pin Bar price action analysis

Take a look at the chart above. It could be a qualifying trade with Pin Bar. When the trend is moving sideways and the price enters the important resistance zone. The Bearish Pin Bar was nice when it hit the resistance, then got kicked down and closed. With a short nose plus a long upper tail, there is no reason for us not to enter a Sell order.

Wait, let’s zoom out the chart to see the broader market. Do you see that the long-term trend line has been broken? it shows that the buying power is strong when the bulls start entering.

Zoom out the chart to observe the Bearish Pin Bar pattern
Zoom out the chart to observe the Bearish Pin Bar pattern

Did you notice the highlighted red circle? Before forming the Bearish Pin Bar, the market broke the downtrend decisively. That shows the downtrend is coming to an end, making the Bearish Pin Bar no longer reliable. So skipping that setup is the best option for you.

While support and resistance levels are important, trendlines are just as important. Let’s combine them to get a broader view, safer entry.

Note when trading with the Hanging Man and Pin Bar

Next, we will talk about Hanging Man and how to avoid confusing it with a continuation Pin Bar pattern. The Hanging Man pattern is simply a Pin Bar that forms at the highest high or lowest low and usually appears at the support or resistance level.

Notice the appearance of the Hanging Man candlestick
Notice the appearance of the Hanging Man candlestick

The Hanging Man does not mean that the sellers are overwhelmed by the buyers through the lower tail of the candle. So it will not be used as signals to enter Sell orders. Instead, we use it as a sign that the uptrend is ending.

The common difference between the Hanging Man and the continuation Pin Bar is that the Hanging Man often appears at extreme points when the market has ended up or down. Those points are important support and resistance levels. The continuation Pin Bar often appears in the early stages of a trend.

For example,

Difference between the continuation Pin Bar and Hanging Man
Difference between the continuation Pin Bar and Hanging Man

Looking at the picture above. We see that the continuation Pin Bar appeared after the EMA10 crossed the EMA30 from below, signaling an increase in the price at the beginning of the trend. And the Hanging man formed at the end of an uptrend signals an impending reversal.

These two candlestick patterns are also quite easy to distinguish. It only takes a few observations to spot the Hanging Man candle and how to avoid trading it when it is a signal of an uptrend nearing its end.

Summary

The Hanging man candlestick is not a signal for you to enter an order. Simply stay out of the market when it shows up. All of which will help you avoid unexpected market reversals that make your account lose for no reason.

To be precise in each order, you need to practice a lot. Above are 2 things that often make traders lose you should note.

At the same time, you must make a note of your own mistakes when trading. From there, improve your skills to help you maximize profits easily.

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2 Things to note when trading with Pin Bar (Part 5)
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