pinbar – Forex Academy

In today’s lesson, we are going to demonstrate an example of a daily-H4 chart combination trading, which has a good lesson to give us. Usually, daily-H4 combination traders look for a strong reversal candle in the daily chart. Then, they flip over to the H4 chart to trigger entry upon consolidation and a signal candle. We get all these in our today’s example, but the price acts a bit differently after triggering the entry. Let us proceed to find out what happens there.

It is the daily chart. The chart shows that the price produces a bullish engulfing candle at a level of support where the price bounces several times. The combination traders may flip over to the H4 chart now and wait for the price to consolidate and produce a bullish reversal candle.

This is how the H4 chart looks. It looks very bullish. The last candle comes out as a bullish candle closing within a level, where the price gets rejection twice. The pair may consolidate here.

The pair produces a bearish engulfing candle. This is a strong bearish reversal candle. However, the H4 buyers must not lose their hope since the last daily candle comes out as a bullish candle. They must wait with hope.

The next candle comes out as a bullish engulfing candle closing above the level of resistance. The buyers may go trigger a long entry right after the last candle closes by setting stop loss below consolidation support and by setting take profit with 1R. Typically, this is an ideal price action to go long for the daily-H4 chart combination traders. Let us proceed to the next chart to find out what happens next.

The next candle comes out as a bullish pin bar. Look at the lower shadow. The price is about to hit the stop loss. However, if the stop loss is set here accordingly, the entry is safe. Nevertheless, the last candle comes out as a surprise for the buyers. It has three lessons to give us. We will learn them in the conclusion. Meanwhile, let us find out how the entry goes.

The price then heads towards the North with a moderate pace and hits the target. The combination traders make some profit out of the trade. It is good. Let us now find out what those three lessons are.

Look at the daily chart again. See the price consolidates within two horizontal levels. There are two resistances. It means the price does not have enough space to travel towards the North as far as the daily chart is concerned. It may have held some buyers in the H4 chart back to go long in the pair.
Set your stop loss accordingly with some safety pips as well.
Be patient. If a trade does not go according to your expectation, do not panic.

In today’s article, we are going to demonstrate an example of a trade, which does not go according to the price action traders’ expectations. We try to dig out what goes wrong with the trade. Let us get started.

This is a daily chart. The chart produces an inside bar right at the level where the price had a rejection earlier. The buyers, according to price action trading, usually wait for the price to produce a bullish reversal candle around such levels. However, the buyers may remember an important point here that the bullish reversal candle is an inside bar. An inside bar is not known as a strong reversal candle. Nevertheless, it is a daily bullish reversal candle producing right at the level of support, so they daily-H4 buyers are to flip over to the H4 chart.

The H4 chart’s price action is bullish. The last candle comes out as a bearish pinbar. The price may consolidate soon. If that happens, followed by an H4 bullish breakout, buyers may go long on the pair. The next significant swing high is far, offering a tremendous risk-reward.

The price consolidates and produces a bullish engulfing candle breaching the level of resistance. The consolidation does not look an ideal one. Ideally, the buyers may trigger a long entry here. This is what we have been learning on daily-H4 chart trading lessons. Let us assume that we take a long entry here. Let us find out how the trade goes.

The next candle comes out as a bearish candle. It does not hit the stop loss, but it looks ominous. Since taking a loss is an unavoidable thing in trading, so we may let it go. This is what we have been learning, as well. Let us find out what happens next.

It hits the stop loss. As far as trading psychology is concerned, we must not let it take over us. However, with this trade, two things may hold many price action buyers back taking the entry.

An inside bar bullish daily reversal candle
Ugly looking consolidation

We have demonstrated on many occasions, an inside bar daily reversal candle with good-looking consolidation ends up offering a winning entry. On some lessons, an unusual consolidation but with a daily bullish reversal candle does the same. Over here, a combination of both ends up offering a losing entry. On some occasions, such price action (inside bar daily reversal candle and unusual consolidation) may end up offering a winning entry. However, to have better winning consistency, we may skip taking entry on such price action.