The pin bar pattern is a popular pattern to follow and is incorporated in most successful gold traders’ plans. The pin bar indicates a rejection and reversal of a gold price. When you look at the tail of the pin bar, it indicates where the price was rejected and will continue to move in the other direction.
A Pin bar happens when a single candlestick pattern signals a reversal. It has a long tail and a short body. Usually the tail is at least 3 times the length of the body. As you can see in the chart above, you see a very clear bearish pin bar in the price of gold which indicated that gold was going to move downward because of the bearish pin bar. You can implement both long and short trades with your gold trading, by staying on the lookout for these kinds of patterns. Here are some Pin bar strategies:
Entering Right at the Close of the Pin Bar
Once the single candlestick has closed, you can make a market order in the direction that the pin bar has signaled. You want to look for Pin bars in the longer chart time frames of 60 minutes or higher when you are trading in gold. Make sure you wait for the candlestick to close so that you don’t get caught moving in the wrong direction. It is also important to place a stop loss above or below the tail depending if you are going long or short the price of gold.
Entering With The Trends
You would be wise to keep an eye on the overall market trend when making your gold trade as pin bar set ups can not only mark the beginning of a trend but also lend support to that trend as the price of gold moves in a certain direction. You will have a higher success rate when you work with the support and resistance of the trend lines on the chart. This is a good strategy in most cases because of the risk-to-reward ratio. However, be careful of false breaks in the trend line.
General Pin Bar Trading Tips
You can enter the pin bar with a market order or wait for a 50% retracement of the pin bar. Once you enter the trade you will want to exit if you see another reversal where the price wants to again change the direction. Also make sure your stop loss gives you a bit of breathing room. You don’t want to get stopped out of your trade too soon. A pin bar gold trading strategy can be difficult to develop at first, but it will get easier with practice. Look at daily gold chart for pin bars as they can provide some good opportunities to enter the market either long or short gold.
The more you practice with learning pin bars, the better you’ll be. Of course, everyone has different risks they want to take, so no single strategy is better than the others. Go with what works for you at the time and adjust accordingly as you become more advanced.
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