The pin bar is a staple of the way I trade the forex market. It has a very high accuracy rate in trending markets and especially when occurring at a confluent level. Pin bars occurring at important support and resistance levels are generally very accurate setups. Pin bars can be taken counter trend as well, as long as they are very well defined and protrude significantly from the surrounding price bars; indicating a strong rejection has occurred. In the following chart example we will take a look at pin bars occurring with the context of a trending market, my favorite way to trade them. Notice how each pin bar resulted in movement that met or exceeded the next logical resistance point, marked on the chart as “target”
Pin bars occurring within the context of a trending market on the GBP/JPY daily chart:
The fakey setup is another bread and butter price action setup. It indicates rejection of an important level within the market. The forex market is designed to fake traders out, as often times the market will appear to be headed one direction and then reverse, sucking all the amateurs in as the professionals push price back in the opposite direction. The fakey setup can set off some pretty big moves in the forex market. The chart we will look at below shows a fakey that occurred in the EUR/USD market that set off a huge down ward movement.
Nice fakey setup that occurred at a major turning point on EUR/USD daily:
The inside bar is a great trend – continuation signal. It shows a brief consolidation and then a break out in the dominant trend direction. Inside bars are best played on daily and weekly charts. They allow for very small risks and yet very large rewards. The inside bar combined with a very strongly trending market is one of my favorite price action setups. We can see in the chart below an inside bar that formed on daily USD/JPY after a strong pin bar signal changed trend direction. This inside bar occurred at a 50% retrace level as well as a support level, whenever we get price action at a confluent level like this it is viewed as a very strong setup.
Inside bar setup on daily USD/JPY:
