Monday, January 16, 2012

Profile of a bad pinbar - stuck in traffic

The above image provides a comparison between an "average-quality" pinbar and a bad pinbar. I traded both pinbars, and the average-quality only broke even whereas the bad pinbar resulted in a loss.

The bad pinbar is marked with a red arrow. As you'll notice it's nose failed to make a significant new swing-high and the entire candle is stuck within the range of the previous 3-4 candles ("stuck in traffic"). This "pinbar" didn't signal a reversal. It represented ranging price movement that had occured over the hour. A good quality pinbar should have a nose that rises above everything else.

The average pinbar is located in the previous candle. As you can see, its nose is somewhat prominent and did signify a small reversal. The reversal did not have much strength, but at least I managed to break even with this one.

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.