This Candlestick Pattern Will Change Your Trading (Works on Crypto, Forex & Stocks)

[00:02] there's a secret candlestick pattern that could predict exactly when a price reversal will happen now this candlestick pattern is proven to almost always show up right before a reversal occurs and so in this video i'm

[00:16] going to reveal exactly what this candlestick pattern is and how you can profits but first be sure to leave a like in this video and subscribe to the channel

[00:28] if you want to see more high quality videos like this for free [Music] and so the specific candlestick pattern that i'm talking about in this video is called the pin bar

[00:45] the pin bar is simply a candlestick pattern that follows these specific criteria first is that it has a relatively small body and second it has a relatively long wick

[00:57] that sticks out on one side this is often referred to as the tail of the pin bar now in some variations of the pin bar a smaller wick can be seen sticking out on the other side this is often referred to

[01:09] as the nose of the pin bar however though other variations may also come without a nose which is perfectly fine so again the two important criteria that validates a pin bar are

[01:22] first it needs to have a relatively small body and second it needs to have a long wick that sticks out on one side [Music]

[01:35] appearance of a pin bar mean that a price reversal will happen and so the logic behind it is that it is simply a candlestick pattern that signals rejection let me visualize this for you

[01:48] in this example we spotted a strong upwards momentum as buyers pushed the price all the way up towards the highest point of this candle but then before the candle manages to close sellers started coming in and

[02:02] pushed the price back down rejecting that previous upwards momentum so as you can see that rejection by the sellers caused this candle to have a small body and a long wick that sticks out which as we know is called a pin bar

[02:17] and this is the reason why a pin bar is generally regarded as an early sign of a market reversal because it shows us that the momentum has shifted towards the opposite direction and as you can see

[02:30] immediately after that pin bar appeared the trend reversed towards the downside but bear in mind even though a pinbar signals a reversal it does not guarantee one remember that in trading a perfect strategy does not exist there

[02:45] will always be risk of failure which is why every time you take a trade make in check so that you don't blow up your account account now let's move on

[03:01] patterns that exists the bullish pin bar and the bearish pin bar so a bullish pin bar shows us that the price is likely going to reverse upwards while the bearish pin bar shows us that

[03:13] the price is likely going to reverse downwards now the way you differentiate between a bullish and a bearish pin bar is by looking at the position of the tail itself if the tail is below the candle then it

[03:27] will always be a bullish pin bar and if the tail is above the candle then and if the tail is above the candle then it will always be a bearish pin bar so a common mistake that i see most traders make is that they focus on the

[03:39] color of the pin bar instead remember the color of the pin bar does not determine if it is bullish or bearish a bullish pin bar can be either green or red and a bearish pin bar can also be either green or red

[03:53] the only thing that differentiates between the two is the position of the now the reason for this is because the tail represents the direction of where the rejection came from

[04:06] so if the tail is sticking out from the bottom it shows us that the rejection again this happens because we have sellers that pushed the price all the way down before buyers stepped in rejected it and pushed the price all the

[04:20] way back up before the candle closes which is why even if this is a red candle it is still considered as a sticking out from the bottom means that

[04:32] the momentum is going upwards similarly if the tail is sticking out from the top it means that the rejection came from above and that the momentum is going downwards which is why even though this is a green candle it is still

[04:46] this is a green candle it is still considered as a bearish pin bar considered as a bearish pin bar now moving on so first a common mistake that traders make when trading using the pin bar

[05:01] strategy is that they immediately assume that a reversal will take place just because a pin bar pattern appears remember markets don't just automatically reverse just because of a single candlestick there needs to be

[05:14] other supporting factors at play and to explain this i'm going to show you two very different pin bar setups so let's first look at setup number one in this chart we can see that the price was moving downwards before a bullish

[05:29] pin bar appeared now the appearance of a bullish pin bar reverse upwards however in this particular example instead of reversing upwards the price continued moving downwards instead

[05:44] which means in this setup the market did not react to the pin bar at all now let's compare that to setup number two so in this setup we can see that the price also went down also formed a bullish pin bar but this time the market

[06:00] upwards so the question is what makes setup number one different from setup number two even though both of them had bullish pin bars why did one form a reversal but the

[06:13] other one didn't well it's because of the difference in trade quality setup number one is what i call a flow quality pin bar setup and setup number two is what i call a high quality pin

[06:26] two is what i call a high quality pin bar setup and let me explain why this is so the reason i refer to setup number one as a low quality setup is because the pin bar was formed by itself there weren't any other supporting factors

[06:39] meaning that markets will have lesser chance of actually forming a reversal because a single candlestick pattern alone is not a strong enough signal but remember the key word here is lesser chance a reversal can still happen but

[06:52] the chances of it is lower now let's compare that with setup number so the reason why i refer to this as a high quality setup is because if you notice the pin bar was formed while the price was at a key support level down

[07:08] here because in the past price had rejected this level before meaning it'll have a higher chance of rejecting it again in the future so now instead of just a pin bar pattern we also have other supporting factors at

[07:22] play that could trigger a reversal in this case the pin bar was formed while at a support level which means the chance of a reversal happening will be higher and so high quality setups like this is

[07:34] and so high quality setups like this is what we want to look for in a trade on how you can easily spot these high quality setups every time key level let's look at one example over to the

[07:51] left we can see that price went up and reverses back down making this a level of resistance next as price approaches the level of resistance we can see a bearish pin bar candle

[08:03] again this is a bearish pin bar because the tail is sticking out on top of the candle so at first buyers pushed the price all the way up before sellers stepped in and pushed the price back down before the

[08:16] candle closes indicating that there's a strong rejection from above as price touches this level which is why the tail is sticking out from the top and so there are now three things that's currently happening first we can see

[08:30] that price have rejected this key level in the past before meaning it is likely to do it again in the future second we can see that the price is currently touching the resistance level and third we have a bearish pin bar

[08:45] there's downwards momentum because the rejection came from the top so all these factors at play made it a good opportunity to enter a short position here now for your risk management you can set

[08:58] a stop loss at the end of the tale and profit target at three times your stop loss and as you can see we made a nice profit off of this downwards reversal let's look at another example again the first step is finding a key

[09:14] so let's analyze this chart here we can see that prices went up rejects this level and moved downwards making this a level of resistance next we can see that the price went up and broke the previous resistance level

[09:29] which means this level now becomes a support level then we saw that the price went down towards that support level and formed a bullish pin bar because again the candle has a small body and a tail is sticking

[09:42] out to the bottom meaning that the rejection came from below next if you look closely we can actually spot another key level down here an upwards trend line as price also rejected this

[09:55] level multiple times in the past which means we now have a point where two key levels intersect each other first is the resistance level that turns support and second is the upwards trend line

[10:08] this point is what's called a level of confluence if a price is at a level of confluence it usually means that it has a much higher chance of reacting to that level so now we have multiple signals that show us that the price will likely

[10:21] reverse from this level first is that the price is at a level of confluence and second we have a bullish pin bar that formed while the price was at that level of confluence

[10:34] so based on these multiple factors we can confidently take a long position here now for your risk management you can set your stop loss at the wick's end and profit target at two to three times

[10:46] your stop loss and as you can see we easily profited off of this upwards reversal but keep in mind these setups aren't magic a trade can still fail even if it's a high quality setup remember

[11:00] trading is all about probability nothing is ever guaranteed so never go all in on one single trade and always use proper risk management just like the one that i now let's look at more examples of these high quality setups

[12:05] really effective trading strategy to master because it helps you identify where a rejection is on the market and again don't ever trade the pin bar alone always use other confirmation methods like support and resistance to

[12:18] further increase the win rate of your setups and as always if you're new to the channel click the subscribe button right now for more high quality videos like this one it only takes two seconds but

[12:31] it means so much to me so thank you for watching and i'll see so thank you for watching and i'll see you in the next video