Posts by "montmorency"

Oh, it seems that the "Trading" thread has disappeared, so I will put this in here. After Radu mentioned hammers on a 1H chart in another thread, I got to thinking further about this, and revisited some threads on another forum written by someone who has written and taught a great deal about price action in general, often (not always) featuring hammers, or pin bars as he calls them (so do I), even if we both actually use candle charts, not bar charts. BTW, I am not talking about "James16" on FF, although he is perhaps the most famous exponent of this form of trading. The trader I am thinking about was taught by J16, but has evolved the method somewhat.

The name pin pars comes from "Pinocchio" the fictional character whose nose grew when he lied. The idea is that the "nose" of the pin bar is lying - it is pointing in the direction _away_ from where price is likely to go next. It is a reversal signal. However, in the way that this trader teaches it:-

- It's not to much the pin bar itself, but _where_ it occurs that is significant.
- It should be at a swing high or swing low
- It should be at a significant level - e.g. calculated pivot, or de-facto previous turning point (pivot point) ("it" usually being the tip of the nose of the pin, but this can vary).
- The longer the time-frame, the more reliable the signal, i.e. weekly more reliable than daily; daily more reliable than hourly.
- Ideally, it should be supported by the confluence of one or more Fibonacci levels; if more than one, so much the better.

There may be other provisos, but I think those are the main ones. It should be said that in this method, other price action (PA) candle patterns are also used in a similar way, but I will stick to pins here.

As I have said elsewhere, after I started taking more notice of fundamentals, I began to trade less and less on pure PA (including pins and other patterns). However, I was just looking at the daily gold chart, and noticed a few interesting things. I've put up the chart from this site, but the chart I am really looking at goes back further. Also mine is GMT, so it won't be identical anyway.

I'm just scanning the last 6 months or so from left to right on my daily chart, looking for pin bars, which I will number:-

1. 27 Nov 2009, there is a massive bullish pin - does not quite conform to type since it is not indicating reversal of trend, but continuation

2. 22 Dec 2009 - not quite a pin in his definition (nose too small), but it did signal a trend reversal, at least a short one.

3. 11 Jan 2010 - a trend reversal - and is that a bearish pin? Maybe.

4. 3 Feb 2010 - again, not quite a bearish pin, but (in this case) a trend contiuation, not reversal.

5. 5 Feb 2010 - Now here's a beauty: distinctive bullish pin with a real trend reversal

6. 24-25 Feb - 2 successive pins - trend continuation.

7. 3-4 March 2010 - there is a change of direction (longish pull-back rather than change of trend I would say) with no pin, although some might recognise other PA patterns here.

8. 24 Mar 2010 - now that's kind of a pin, but it's not working in the usual direction - the nose isn't going in the opposite direction of the move, but the same - anyway, upward trend resumes.

9. 12 April - pullback - not really a pin though.

10. 19 April - now there's a nice bullish pin, and up it goes.

11. 4 May 2010 - here we have a bearish pullback (no pin), followed immediately by

12 5 May 2010 - bullish pin, indicating (presumably) a resumption of the uptrend.


Now one of the reasons it's quite hard to trade these on the longer T/Fs, even though they may be more reliable than say, the 1H, is that (obviously), they don't occur all that often (even less often on the weekly chart). There are other reasons why they can be hard to trade, but I don't want to get too bogged down in detail here.

As I have said, I don't take as much notice of these as I used to, but perhaps I have been neglecting them somewhat. If pin bars (or more generally, Price Action) can be effective (at least on longer T/F charts) on their own, if they are also supported by fundamentals, they could be quite powerful, don't you think?


I'm now just looking back on my (broker's) copy of the chart, to see if I have been suffering from "selection bias" - am I just picking out those that worked and ignoring those that didn't?

Well, that is always a danger, and something to beware of.
I've only done a quick scan by eye, going back to 2001, and my immediate impression is:

- There are many examples of pin bars apparently signalling either a trend reversal, a significant pullback, or a significant trend resumption/continuation after a pullback.

- However there are probably many more examples of reversals with no pin bar pre

@Coach: Agreed! - I'm finding the market in this condition more nail-biting than the usual choppy mess is. I don't think anyone really knows where it's going to end, technicians or fundamentalists.

@Radu: To offer an answer to what I think your question was: I do know some people who trade these sort of patterns on the 60 minute chart, and regard them as significant. However, with the proviso that they are supported by other indications, e.g. the pattern is occurring at a significant level, e.g. pivot or turning point, confluence of a significant Fid level, and probably other things I can't think of at the moment.

They do seem more reliable on daily and weekly charts, but in practice, in my experience, are not as easy to trade on those time-frames as one might think. When I started taking more notice of fundamentals, I stopped taking so much notice of them, but I do watch them for pullback indications....just a sort of indication of the natural "pulse" of the market, as it were, without necessarily taking them all that seriously.

Which cartel?

@Sydneyjames: Isn't that the second(?) time you have "found" these books?
Is it you selling them? Aren't there - ahem - copyright issues here?


If anyone remembers the character that Sidney James used to play on the old BBC Tony Hancock shows (Hancock's Half Hour)....well, say no more.

@Nzvik: Funnily enough, one of the You Tube videos I found by chance in my recent excursion there was by some people called Tradeguider.com. These people seem to be into VSA (Volume Spread Analysis) in a big way. The interesting thing was that they claimed that there _was_ a way of using volume with Forex. Shouldn't be too hard to find on You Tube if anyone is interested.

Please note: I have no connection with them or any other outfit peddling products or services on the net.

I got quite interested in VSA at one time, but later came to the conclusion that it was just one more Holy Grail that wasn't.