In this video lesson I discuss the 4 hour Pin Bar reversal signal that just formed on the GBPUSD chart. The signal formed at the key support level of 1.6680 in the direction of the prevailing up trend. This buy signal suggests price could potentially push higher into the recent high at 1.6820.
Please remember to leave a comment and share it with other traders. Enjoy… Nial
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Hi Guys, Nial here from learntotradethemarket.com and welcome to another trade setups video. I just spotted a live pin bar trade on the British Pound 4-hour chart and I thought I’d walk you through the trade and explain the logic in my entry…
I want to draw your attention this level here at 1.6680. You can see the market did move up to this level, rotated down and then finally broke up through the same level and now we have just cushioned back to this level at 1.6680.
This is obviously an important inflection point or swing point in the market. The fact that we are just holding here and we’ve just seen a nice 4-hour pin bar reversal signal does suggestion to me that prices want to try and push higher, back up towards that 1.6820 level which is the recent high point on the chart.
So, the logic is, if this level here is holding (1.6680) we will see prices move back up to this recent high. But, there’s a little bit more in this that I just want to explain to you…
One thing we can do is just quickly go to the daily chart and we can see that the price is generally trending higher. Yes, it is choppy but we are trading with the path of least resistance, which his upward. If we do zoom into the 4 chart we can see that nice upward momentum.
I’m going to zoom in further and just explain this signal in detail. So, what I’m looking for with my trading is not only trading with the trend and at key levels, but I look for a trigger or confirmation. In this case it’s this pin bar reversal here, it’s actually a long-tailed 4-hour pin bar reversal, it’s something that I teach my students and it’s one of my most common strategies or most common entries, usually trading it on a daily or 4 hours or 1-hour chart.
Now, we do have a quality signal here and I want to explain to you how I’m going to get in, where I’m going to place my stop and where I’m going try and get out of the trade. So, we have this level here at 1.6680, obviously, I’m going to try and get a long entry or buy the market as close to that support level as possible. So, I’m going to try and buy it around here, so I’m going to place a limit order in so if the market does rotate down near to 1.6680 I will be in a long position. I’m going to look for the market to head up towards to 1.6820 which is around about 140 points away. So, let’s say about a 120 to 140-point target and I’m going to place my stop well below the low of today’s pin bar which is below 1.6640, I will try to get it well below 1.6640 somewhere down around here. Obviously, I will monitor the market ton an intraday basis every four to eight hours and just monitor the price action. Hopefully, this works out, so it will be a nice 2 to 1 risk reward, the way that I’ve worked that out is 140-point target and with a stop loss around 6o to 70 points, obviously 70 goes into 140 twice, so it will be a 2 to 1 risk reward.
Now, there’s a good chance that I might not actually get filled on this trade. As I said I am waiting for the market to rotate down towards the 1.6680 – 1.6700 support area, if we do end up getting down to that entry area I will be in a long position. Hopefully, things work out and price does move up toward s the target area around 1.6820. Obviously, things could go wrong that’s why we have the stop loss in place, which as I said before it will be below the low or the tail of the pin bar here.
Really hope you’ve enjoyed today’s video. See you in the next video and good trading.