Long-tail Pin Bar Will Always Be My Priority

Nial Fuller is a popular trader, columnist, and tutor in the foreign exchange market. He has more than 16 years of financial market trading experience. Today, his price behavior trading is regarded by many traders as "authoritative". In this article, Nial explained the use of the "long-tail pin bar" in the price chart for your reference.

Text / Nial Fuller Professional Trader, Winner of Million Dollar Trading Contest

Trading partners asked me if I have a favorite price chart pattern. I said yes. Among many trading strategies, there is one that I secretly call the "Desert Island Strategy", which means that if I were exiled to a desert island one day, and I can only choose one strategy or signal, then I will choose this one without hesitation.

It's the pin bar. Simple, powerful and sustainable. The pin bar has stood the test of time. Whether it was 50 years ago or now, it has always benefited traders.

We have said before that there are many types of pin bars, and anyone who has traded should know. I won't expand on the explanation, I just want to talk about a special "long-tail pin bar", which is not common, but once it appears, I will definitely grasp it because I know how much profit potential it means.

What is the difference between a long-tail pin bar and an ordinary pin bar? 

The size of the pin bar is different, but to my understanding, there are only two types: ordinary pin bar and long-tail pin bar. The long-tail pin bar is the same as the name, usually like this:

The following belongs to the scope of what I think is an ordinary pin bar:

Some important features about long-tail pin bar:

▪ Their tails or shadows are more prominent and obvious than other candlesticks around them;

▪ they are signals of high profitability;

▪ They appear infrequently, but often accompany important market fluctuations after they are formed;

▪ The entry of the long-tail pin bar is not easy, and sometimes it is necessary to wait until the second entry;

▪ They usually mean an important reversal of prices, and they can also be a signal of continued prices;

▪ A long-tail pin bar brings a favorable risk-reward ratio, especially if the admission is set up well.

Another important feature of the long-tail pin bar is that it is not a one-time signal. The impact of the long-tail pin bar is so great that it can change the market state for months or even longer. Once this signal appears, we can continue to look for trading opportunities based on its directivity. 

Therefore, the meaning of the long-tail pin bar is not just trading signals, it can help us to understand the market dynamics and people's trading psychology. Its appearance means that the market has reached the final point of the current market or confirmed that the continuous market will continue.

How to trade long-tail pin bar?

1．Long-tail pin bar with convergence point

First, the convergence point is still a very important confirmation factor. The main convergence points are three: trend, important price, and signal. It is ideal to have two of these three factors as support for the long-tail pin bar signal. The following figure shows the long-tail pin bar signal with the above three convergence points:

2. Counter-trend long-tail pin bar with convergence point 

Sometimes the formation of long-tail pin bars is counter-trend. With this signal, we need to see if it breaks through the key price level or causes a false breakthrough. If so, then it can be regarded as a counter-trend long-tail pin bar with convergence point support.

Sometimes there is an important reversal under continuous fluctuations, and it is presented as a long-tail pin bar, such as the following figure. This can be regarded as a "break" when the market fluctuates too fast and too long.

3. Long-tail pin bar with convergence point in trend 

The long-tailed pin bar is also a good continuous signal for the trend. We can look for a long-tailed pin bar after a retracement in the trend or near a key fluctuation point.

At the same time, be wary that if there is a large pin bar at the high or low point of the trend, it means that the current trend is about to reverse.

4. Long-tail pin bar indicating breakthrough

A market that has been in consolidation for a long time will eventually break through in a fierce manner. If a long-term pin bar appears in a market that has been consolidating for a long time, it means that a breakthrough is coming soon.

5. Long-tail pin bar creates event area

The long-tail pin bar is also one of the main reasons for the formation of the event area in the market. Therefore, if you see a long-tailed pin bar, then you must pay close attention to the nearby area, because the price is likely to retreat to this area quickly or every few weeks / months, this area is the second opportunity to enter.

Tips for trading long-tail pin bar

▪ Don't consider trading long-tail pin bars difficult. Recognize it on the map and seize the opportunity to enter. Long-tail pin bar is a trading opportunity not to be missed;

▪ Pay more attention to key price points, long-tail pin bars often form there;

▪ The long-tail pin bar with the shadow line prominently more prominent than the surrounding candlesticks is the best trading opportunity;

▪ Pay attention to long-tail pin bars that make false breakthroughs at key prices, they often bring strong trend reversal information;

▪ Keep an eye on the high volatility in the uptrend and the pin bar formed near the low volatility in the downtrend. These are often signals of market reversals;

▪ The information gathering point in any trading signal is important, as is the long-tail pin bar.

Our purpose is to find high profitable possible trading signals. The long-tail pin bar is one of them. Most traders lack the ability to identify signals or patterns, but the long-tail pin bar is easy to see at a glance, so I also recommend that you be more familiar with this trading method.