How To Use Price Action To Profit From The Forex Market - Part 1

In this first part of this collection of articles I would like to focus on one main candle stick pattern that if used correctly can be used as a system all by itself.

The Pin Bar FormationAs price reaches certain levels of support and resistance it often makes a sudden push to try and break through it which then fails and returns back to around the opening point of the candle. Once the candle closes in this position it creates a formation that looks like a pin.

For example: A candle opens at 1.2000, makes a low of 1.1995 then and high of 1.2030 before returning to 1.1998 where the candle closed.

This formation is a powerful indication that price may be about to change direction. For an optimal setup I would like to see the long pin of the candle trying to push through a strong support/resistance or trend line which was rejected.

A good way to trade these formations is to place your order above/below the pin with the stop a few pips above the other end. If the point of the pin is broken then The trade is no longer a high probability trade.

Fore example: price is rising to a strong resistance line and forms a perfect pin bar, I would expect price to reverse so I would place a sell order just below the pin bar.

An important point is not to trade every pin, select the best ones. I often see people trading pins that are more like natural bars.

The longer the pin on the bar the better the signal.

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