Would a Pinbar by any other name....?

[Splitlink]

Lightning,

I have a copy of this - thank you for the reminder (like everything else, printed then forgotten).

I am familiar with the ideas behind pin bars but thought our friend Herr Bramble was offering something profound with his references to Hanging baskets and Swinging 60's.

I'll look into candlesticks myself.

Grant.

The positive point about these signals is that they give them within the bar, unlike other indicators that work on averages. Nevertheless, they need something else. TD uses resistance lines or Fibs, but the article that I read allows any type of trend line, average, or whatever. They are a backup confirmation for what you are, already, using but, used on their own there are many failures.

Split

 

[wasp]

Hi Wasp,
are they 3/4 hour bars? If so discrepancy could be due to one broker opening for business earlier then the other. I read a viewpoint somewhere that says for that reason 1hour bars are more reliable to be looking to know what the rest of the world looking .(i.e intraday s/r levels.) . I don't know the validity of this viewpoint ; your charts reminded me that viewpoint , so I thought I share it.....

regards,

Searchlight

Hi Searchlight, they are 4 hour candles and yes, the former opens an hour earlier and goes to show that no 2 people are necessarily looking at the same thing/chart/setup. 1 hour charts would mean that there are higher chances of more people seeing the same pinbar but look behind/deeper at the pinbar and the surrounding bars and you'll see its just part of a bigger picture and it'll give you more reasoning behind for the position other than just the pinbar.

Here is a screenshot of the same market, same timeframe etc but with netdania, again, no pinbar but still all the other reasoning's for a short still........

As split says, they can be useful, when combined with other indications.

 

[firewalker99]

I'm surprised this thread hasn't had more interest.

The reasons for that might be more obvious than one thinks. For starters the "First Steps" forum has several hundreds of threads. Most of them are short-lived and get very little attention. Each week new threads are created, so it's easy to overlook one.

Another reason why your thread didn't immediately get the anticipated (?) attention level: most members who've been here for a while usually don't go skimming for new threads in this "First Steps" forum.

Thirdly, the thread title sound less attracting than - for example - "How to make x% trading 1 hour a day". Using a question to arouse the curiosity of the public often works in slogans, but not in this case.

Finally, the first couple of sentences of the first post won't convince as many people as "I want to show you how to make money trading the markets."

That, is actually more interesting than the original subject matter.

Which I why I took the time to answer this. Next post will be on-topic.

 

[TheBramble]

I am familiar with the ideas behind pin bars but thought our friend Herr Bramble was offering something profound with his references to Hanging baskets and Swinging 60's.

Strewth mate, I thought you were joking. I have no idea if it's profound or not. I just wondered if anyone hooked on pinbars had looked at these variants.

 

[firewalker99]

Its interesting how much credit is put in to the pin bar all by itself.

2 different metatraders, same market, same timeframe, yet only 1 pin bar..... but can you spot how many other indications of a reversal there are...?

I see 4 btw!

Yes, but what if the next bar was an upbar again, equivalent in size and similar OHLC as the first one?

Nobody reacted to the fact that you called this a short signal, but am I the only one who isn't seeing this as such? If anything, I would consider it perhaps an exit or scale out/lock in profits signal.

 

[firewalker99]

Mr Bramble,

Good day, Sir.

I assume candlestick formations have equivalent bar (high,low,close) formations. Could you state your ideas in bar terms, please?

Grant.

I doubt there are specific names for these kind of formations in bar-charts. Except for a pin-bar perhaps, but that only came much later. I believe the specific candlestick formations have their original Japanese names long before anybody every mentioned Pinocchio.

Candlestick charts by nature make it "easier" to give more meaning to a single candle because of the visual representation. As opposed to bar charts where there are basically only vertical and small horizontal lines, candlesticks can have bodies or not. Therefore I think most people will find it easier spotting a hammer than a pinbar, although both are obviously the same.

Shooting stars are the same as inverted hammers, where as a hanging man is the same as a hammer. They only have different names because candlestick followers define them differently, depending on the preceding price action.

For instance, a bearish reversal signal will be given be a shooting star after an upmove, but a bullish reversal signal after a downmove, where it will be called an inverted hammer.

One of the reasons shooting stars and pinbars/hammers get more attention is because they are easier to spot imo. The tails of these formations present themselves "outside" the normal price action, which isn't the case with inverted hammers/hanging mans.

See images.

 

[wasp]

Yes, but what if the next bar was an upbar again, equivalent in size and similar OHLC as the first one?

Nobody reacted to the fact that you called this a short signal, but am I the only one who isn't seeing this as such? If anything, I would consider it perhaps an exit or scale out/lock in profits signal.

Hi FW,

First is a chart for why I would see it is a short signal, and a second for my reaction to what would I do if it were to then reverse and produce and upbar, equivalent in size and similar OHLC as the first one.

On the second, depending on the next candle, whether in the region of A or B, would determine my next directional movement. I understand candles/timeframes are meaningless in the constant streaming flow of which is a market, but I don't have time nor the inclination to chart watch 24/7.

 

[firewalker99]

Hi FW,

First is a chart for why I would see it is a short signal, and a second for my reaction to what would I do if it were to then reverse and produce and upbar, equivalent in size and similar OHLC as the first one.

On the second, depending on the next candle, whether in the region of A or B, would determine my next directional movement. I understand candles/timeframes are meaningless in the constant streaming flow of which is a market, but I don't have time nor the inclination to chart watch 24/7.

I don't know if Tony approves of this, because it might not be relevant to the general public, if we go zooming in on a single trade. I'll apologize if this reaction is not fit for this thread, but in the meantime...:

(1) Where does that horizontal line come from? I can see no evidence at all of resistance there... On your second chart that horizontal line starts on the left but price just goes through it on several occasions.

(2) Yes there's the breach of that trendline, but that alone would only give me a warning signal.

(3) On a larger timeframe as you posted it, the pin-bar more or less seems to appear in mid-air.

(4) The downtrend which was in place on the left part of your chart, seems to be no long valid and after a solid consolidation lasting several days a reversal is on the cards, which would have me looking for longs on retracements. Shorts have lesser potential imo.

Looks like a bullish instrument to me. Care to tell me what it is (sorry I don't know track fx as closely!)? I'd like to keep an eye out it in the future to see how this pans out.

 

[wasp]

I don't know if Tony approves of this, because it might not be relevant to the general public, if we go zooming in on a single trade. I'll apologize if this reaction is not fit for this thread, but in the meantime...:

I hope Tony doesn't mind either (apologies if it does Bramble, we'll take it elsewhere if you so wish) but, this example does stem from a setup related to a pinbar and the consequent difference in different fx providers not showing the same candlestick and questioning the validity of said setups.

(1) Where does that horizontal line come from? I can see no evidence at all of resistance there... On your second chart that horizontal line starts on the left but price just goes through it on several occasions.

The line stems from quite a distance back and is used as support and resistance numerous times over the last few months. S/R doesn't have to be erased because price has passed through it before, it can still re use said levels at a later date. (see chart)

(2) Yes there's the breach of that trendline, but that alone would only give me a warning signal.

Each see things differently, the breach is not so much the factor, but the pullback and inability to break through at perceived area of short/pinbar that alerts me.

(3) On a larger timeframe as you posted it, the pin-bar more or less seems to appear in mid-air.

That is probably due to me deleting the future data so we aren't seeing where price really went, rather, looking at your suggestion of an upbar.

(4) The downtrend which was in place on the left part of your chart, seems to be no long valid and after a solid consolidation lasting several days a reversal is on the cards, which would have me looking for longs on retracements. Shorts have lesser potential imo.

Depends what you are after really. my short was never intended to be a' retirement' trade, rather, to take advantage of a possible drop with careful attention for a similar signs to then reverse as and when the market signalled such a reasoning.

Looks like a bullish instrument to me. Care to tell me what it is (sorry I don't know track fx as closely!)? I'd like to keep an eye out it in the future to see how this pans out.

Bullish it may well be and in the bigger picture I expect newer highs for the kiwi, but in the meantime, as nothing moves in a straight line, these reversals off S/R coupled with trendlines give good reason to reverse until such time as the opposite comes along.

I wouldn't call this something exclusive to FX really, not that I watch other markets very much, but it all seems very basic S/R and trendline signals to me. (S=R=S=R and trends are your friend till the bend at the end yada yada) They tie in perfectly with the candlestick formations (be it tweezer or pinbar or any other) and for me, its more substantial reasoning for the trade than a candlestick pattern that only shows up on one of the three charts I posted.

 

[TheBramble]

It wouldn't be the first time a thread I'm involved in has gone a little off topic...but thank you for your consideration.

Go ahead guys, I forgot what the question was anyway and this is probably a lot more interesting for most.

 

[firewalker99]

The line stems from quite a distance back and is used as support and resistance numerous times over the last few months. S/R doesn't have to be erased because price has passed through it before, it can still re use said levels at a later date. (see chart)

Having seen a bit more to the left, I understand better where that line comes from.

Depends what you are after really. my short was never intended to be a' retirement' trade, rather, to take advantage of a possible drop with careful attention for a similar signs to then reverse as and when the market signalled such a reasoning.

That's true. I'm not saying it wasn't a valid trade, after all, t_d has shown us taking trades against the trend can be profitable. I just think these kind of trades have less potential than trades that go along with the trend.

Bullish it may well be and in the bigger picture I expect newer highs for the kiwi, but in the meantime, as nothing moves in a straight line, these reversals off S/R coupled with trendlines give good reason to reverse until such time as the opposite comes along.

Yes, but where exactly does price find resistance? Have a look at my chart, where would you place your stops safely?

Incidentally, that solid consolidation I talked about in my previous post, seems to have occured nicely on the upward sloping trendline.

 

[tune]

Incidentally, that solid consolidation I talked about in my previous post, seems to have occured nicely on the upward sloping trendline.

It was about the mid-price of a hinge too.

 

[firewalker99]

It was about the mid-price of a hinge too.

Neat Who ever said price moved in a random manner?

 

[rols]

I’m not really into pinbars for all sorts of reasons, primarily that I no longer see the close as being a definitive ‘event’, rather more of an arbitrary ‘decision’ and also I’m far more interested in the intent of the price structure rather than its development.

Having said that though, there seems to be enormous interest in this particular chart structure and I wonder if you pinbar aficionados aren’t missing a trick or two…

If we take it that there exists a broad correlation between candle formations and pinbars it isn’t too far off beam to suggest a bear pinbar (heralding a potential bear reversal) is equivalent to Shooting Star and a bull pinbar (heralding a potential bull reversal) is equivalent to a Hammer. All on board so far?

But what about the Hanging Man and the Inverted Hammer?

The hanging man is pretty much the same structure as a bear reversal, but the pinbar is reversed, pointing back down into the ‘eyes’. As with the Inverted Hammer, this is a potential bull reversal with the ‘nose’ pointing back up into the ‘face’.

If you’re into pinbars, taking these two additional constructs into account will potentially double you potential trade setups.

I’ll be interested to see if any of you find the relative effectiveness of these two new ‘pinbars’ to be of a similar, or better, quality than the ones with which you currently work.

Well quite, what about the others?

I thought to have a quick look at these close relations and randomly chose EUR/USD to run a quick back test.

The daily data I used goes back to June 1989. 4 hourly August 2003. Enough data to give a indication of the various candle's frequency and to see whether the next day produced a bull or bear candle. Incidentally the frequency on the hourly candles was too small to be of any use.

Here is the code used to define the candles

HangingMan = (((H-L)>4*(O-C)) AND ((C-L)/(.001+H-L)>= 0.75) AND ((O-L)/(.001+H-L)>= 0.75));
Hammer = (((H-L)>3*(O-C)) AND ((C-L)/(.001+H-L)>0.6) AND ((O-L)/(.001+H-L)>0.6)); }
InvertedHammer = (((H-L)>3*(O-C)) AND ((H-C)/(.001+H-L)>0.6) AND ((H-O)/(.001+H-L)>0.6));
ShootingStar = (((H-L)>4*(O-C)) AND ((H-C)/(.001+H-L)>= 0.75) AND ((H-O)/(.001+H-L)>= 0.75)); }

1. Hanging Man (Bullish)

Daily candles found since June 1989 = 34, next candle BULL=15 (44%) BEAR=19 (56%)
Four Hour candles since Aug 2003 = 13, " BULL=7 (54%) BEAR=6 (64%)

2. Hammer (Bearish)
Total candles found Daily = 209, next candle BULL=85(41%), BEAR=121(58%)
Four Hourly = 51, next candle BULL=28(55%) BEAR=22(43%)

3. Shooting Star (Bullish)
Total candles found Daily = 19, next candle BULL=11(58%) BEAR=8(42%)
Four Hourly = 3, BULL = 2 BEAR = 1

4.Inverted Hammer (Bearish)

Daily total found = 197, next candle BULL=103(60%) BEAR=90(46%)
Four Hourly = 40, next candle BULL = 24(60%) BEAR=16(40%)

Conclusions anybody?

 

[firewalker99]

Well quite, what about the others?

I thought to have a quick look at these close relations and randomly chose EUR/USD to run a quick back test.

The daily data I used goes back to June 1989. 4 hourly August 2003. Enough data to give a indication of the various candle's frequency and to see whether the next day produced a bull or bear candle. Incidentally the frequency on the hourly candles was too small to be of any use.

Here is the code used to define the candles

HangingMan = (((H-L)>4*(O-C)) AND ((C-L)/(.001+H-L)>= 0.75) AND ((O-L)/(.001+H-L)>= 0.75));
Hammer = (((H-L)>3*(O-C)) AND ((C-L)/(.001+H-L)>0.6) AND ((O-L)/(.001+H-L)>0.6)); }
InvertedHammer = (((H-L)>3*(O-C)) AND ((H-C)/(.001+H-L)>0.6) AND ((H-O)/(.001+H-L)>0.6));
ShootingStar = (((H-L)>4*(O-C)) AND ((H-C)/(.001+H-L)>= 0.75) AND ((H-O)/(.001+H-L)>= 0.75)); }

1. Hanging Man (Bullish)

Daily candles found since June 1989 = 34, next candle BULL=15 (44%) BEAR=19 (56%)
Four Hour candles since Aug 2003 = 13, " BULL=7 (54%) BEAR=6 (64%)

2. Hammer (Bearish)
Total candles found Daily = 209, next candle BULL=85(41%), BEAR=121(58%)
Four Hourly = 51, next candle BULL=28(55%) BEAR=22(43%)

3. Shooting Star (Bullish)
Total candles found Daily = 19, next candle BULL=11(58%) BEAR=8(42%)
Four Hourly = 3, BULL = 2 BEAR = 1

4.Inverted Hammer (Bearish)

Daily total found = 197, next candle BULL=103(60%) BEAR=90(46%)
Four Hourly = 40, next candle BULL = 24(60%) BEAR=16(40%)

Conclusions anybody?

Well for starters, I think you swapped bullish and bearish... A hammer is a bullish signal, a shooting star a bearish one, etc.

Other conclusion, how do you define a hammer? How long is the body in comparison to the tail? Each of us will have our own definition about what makes a perfect hammer. So in that aspect your formula is as valid as anybody elses.

This reminds me very much of this thread where we had a lengthy discussion about candlesticks in general.

 

[rols]

Candles in the Wind

Well for starters, I think you swapped bullish and bearish... A hammer is a bullish signal, a shooting star a bearish one, etc.

Other conclusion, how do you define a hammer? How long is the body in comparison to the tail? Each of us will have our own definition about what makes a perfect hammer. So in that aspect your formula is as valid as anybody elses.

This reminds me very much of this thread where we had a lengthy discussion about candlesticks in general.

Well spotted re BULL and BEAR - but does it actually make any difference?

As to defining candles - how long is a piece of string?

It's back to the fuzzy zone again.

Even if a particular candle did retrospectively yield 100% positive result this is no indication for the next time one occurs. Without context the whole exercise is meaningless. Yet why do we persist with these fallacies?

That's why the less experienced/successful traders get spanked and continue to get spanked until they stop chasing candles in the wind and concentrate on the process of trading.

I believe a skilled trader could turn a profit out of any candle on any timeframe.

And before you ask. Yes, I've had my fair share of spankings.

 

[tune]

Without context the whole exercise is meaningless. Yet why do we persist with these fallacies?

I guess one reason could be that these little plankton characters are so nice and friendly. An unpackaged bare line for example, on the other hand, is a pretty scary looking item at first glance. I always remember seeing the flamboyant bond trader on Bloomberg (the one that uses the pointer) happily talking about a nasty looking line chart. It didn't seem to phase him in anyway. I was swimming in a sea of indicators at the time and realised that this pro was using something much sharper. It was a hostile looking thing to me at the time but he was not at all bothered by it. In fact he was having a lot of fun. I wasn't.

EDIT: Just watched a few of his videos. No wonder he was not bothered about the chart, I just heard him say that he is a fundamentalist not a chartist! Shows how much I knew.

 

[JTrader]

I guess one reason could be that these little plankton characters are so nice and friendly. An unpackaged bare line for example, on the other hand, is a pretty scary looking item at first glance. I always remember seeing the flamboyant bond trader on Bloomberg (the one that uses the pointer) happily talking about a nasty looking line chart. It didn't seem to phase him in anyway. I was swimming in a sea of indicators at the time and realised that this pro was using something much sharper. It was a hostile looking thing to me at the time but he was not at all bothered by it. In fact he was having a lot of fun. I wasn't.

But was he a TV presenter, or a successful trader:?: (hopefully both with preference for the latter if he is showing others what to do!)

 

[tune]

But was he a TV presenter, or a successful trader:?: (hopefully both with preference for the latter if he is showing others what to do!)

Had a bow tie on.

 

[rols]

I guess one reason could be that these little plankton characters are so nice and friendly. An unpackaged bare line for example, on the other hand, is a pretty scary looking item at first glance. I always remember seeing the flamboyant bond trader on Bloomberg (the one that uses the pointer) happily talking about a nasty looking line chart. It didn't seem to phase him in anyway. I was swimming in a sea of indicators at the time and realised that this pro was using something much sharper. It was a hostile looking thing to me at the time but he was not at all bothered by it. In fact he was having a lot of fun. I wasn't.

Speaking of trading screens on the telly, how many times do you see a candle chart in the backround?

In a previous thread I mentioned that candles, especially green and red ones taken out of context by the inexperienced can be extremely emotive. Green does not mean go or buy any more than red means danger or sell. Frequently, quite the opposite.