The Pin Bar Pattern

In this we'll be looking at a particular price pattern that is repeated several times, so much that it is treated as price action. The One Stop Continuation pattern.

This wonderful pattern is simple to represent, and easy to identify, and take a trade, though they are a bit rare in occurence. To the keen observer, it is easy.

The one stop pattern requires a primary trend, and a candle opposite to the trend, that shall preferebly be a hammer(or a pinbar candle as it's also called). A trade is entered into, in the side of the primary trend, when the trend continues, past the closing price of the hammer. Note that the working of these varies, and the target price is based on a demand or a supply zone of the broader chart. (Either a primary or a second level target. TSL is recommended for extended time periods)

The Primary trend here is a short trend, and there is a green spinning top that gets negated in the very next candle. We wait for the next candle to close lower than the green candle, and enter at the open of the next candle, going until we spot a reversal sign, in this case, a P.A.R.T signal at B. A is the entry point, and the SL can be a few pips above the green's high, in this case, the close of the previous candle.

A long entry initiated at A, with a SL and trade closed at B at the start of the green candle as per P.A.R.T.

The sheer brilliance of using this to trade is the simplicity, and the minimal risk involved.

Typical cases of failure:

This is an example of failure of the pattern materialising despite giving a good entry signal and the SL being hit in the first candle. note the Small Risk, and huge reward. Lose less, target more.

Here, the red pin bar gives a signal, the succeeding green candle confirms it, and yet the SL is trigerred by the next candle which although is green and hits the target eventually. This is an avoidable trade. The large green candle with the long tail that trigerrs the SL is the first candle of the next day. Taking posositional trades with candles of very small durations is the reason.

Though these work on all virtually all timeframes, when it comes to consistency and ease of identification, the smaller timeframes of 1/3/5/15 min take the lead.

This leads to these rules that can be framed albeit loosely:

Smaller Timeframes
Entry near the start/ at mid-point of the primary trend, not near the close/target.
Entry only after the close has been breached on a closing basis by the suceeding candle.
Appropriate holding periods, consistent with the timeframes.