Half Trend Pin Bar Rejection Forex Trading Strategy

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Half Trend Pin Bar Rejection Forex Trading Strategy

Traders often look for the perfect trade entry. They would want to enter trades just as the trend or momentum is reversing. This way they would be in profit right away. Although it is not easy mastering the precision of a trade entry, it is not impossible to accomplish, and it feels good every time we get to enter the market just at the right time.

Accurate trade entries have the advantage of allowing traders to tighten their stop losses as price moves in the direction of their trades early on. This allows them to minimize their risk and even eliminate it completely as they move stop losses to breakeven.

So, how do we increase our chances at entering trades just at the right time. One of the best techniques is looking for price rejections. Price rejections indicate that the market is not accepting a certain price level and would rather trade at a better price.

Price rejections are better identified using candlesticks. This is because price rejections often cause price to reverse right away, forming a candlestick with long wicks on one side and a small body on the other side. These candlesticks are often referred to as pin bars. These are telltale signs that price is about to move in a certain direction as price is pushing off a certain price level. Imagine the wicks of the candle as the leg and the support or resistance is the level that price is kicking off from.

Price rejections against the current trend might be a hit or miss. They could work very well at times and could also be easily overcome by the trend at times. Price rejection in the direction of the trend tend to work with higher accuracy as there is not trend that price is working against. In this strategy we will be looking at how price rejection can work with a trend following indicator.

Half Trend Indicator

The Half Trend indicator is a custom trend following technical indicator which could help traders identify trend direction and trend reversals.

It plots a line which is overlaid on the price candles. The color of the line changes whenever the indicator detects a shift in trend direction. A blue line indicates a bullish trend, while a red line indicates a bearish trend. This is the main indication of trend direction using this indicator.

The indicator also attaches vertical lines on the main Half Trend line. It attaches the vertical lines below the Half Trend in a bullish trend and above the line in a bearish trend. Traders can use this as a basis for trend direction as well as a basis for trailing a stop loss.

The indicator also plots a blue arrow in a bullish trend reversal, and a red arrow in a bearish trend reversal. Traders can use this is a trend reversal entry signal.

Pin Bar Indicator

The Pin Bar indicator is an entry signal indicator based on the Pin Bar pattern.

The Pin Bar candlestick pattern is a popular trend reversal candlestick pattern. It is characterized by a long wick on one end of the candlestick and a small body on the other end of the candlestick.

A Pin Bar with a long wick at the bottom indicates a bullish price rejection, while a long wick at the top of the candle indicates a bearish price rejection.

The Pin Bar indicator objectively identifies this pattern based on an underlying set of parameters. It then plots a green arrow pointing up whenever it detects a bullish pin bar and a red arrow pointing down whenever it detects a bearish pin bar. Traders can use these arrows as a pin bar-based entry signal.

Trading Strategy

Half Trend Pin Bar Rejection Forex Trading Strategy is a simple trend continuation trading strategy which makes use of the Half Trend indicator and the Pin Bar indicator.

The Half Trend indicator is used to identify trend direction. This is simply based on the color of the Half Trend line.

Price action should also show a trending market based on minor price swing constantly rising or dropping.

As soon as the trend direction is identified, we could then wait for the Pin Bar indicator to provide as a signal that price is rejecting the area that price action is currently in. Signals should be in agreement with the direction of the Half Trend direction.

Indicators:

  • HalfTrend-1.02
  • Pinbar

Preferred Time Frames: 30-minute, 1-hour and 4-hour charts

Currency Pairs: FX majors, minors and crosses

Trading Sessions: Tokyo, London and New York sessions

Buy Trade Setup

Entry

  • The Half Trend indicator should plot a blue line with vertical lines below the main Half Trend line.
  • Price action should characteristically be in an uptrend.
  • Enter a buy order as soon as the Pin Bar indicator plots a green arrow pointing up.

Stop Loss

  • Set the stop loss below the Pin Bar arrow.

Exit

  • Close the trade as soon as the Pin Bar indicator plots an arrow pointing down.
  • Close the trade as soon as the Half Trend indicator plots an arrow pointing down.

Half Trend Pin Bar Rejection Forex Trading Strategy

 Half Trend Pin Bar Rejection Forex Trading Strategy 2

Sell Trade Setup

Entry

  • The Half Trend indicator should plot a red line with vertical lines above the main Half Trend line.
  • Price action should characteristically be in a downtrend.
  • Enter a sell order as soon as the Pin Bar indicator plots a red arrow pointing down.

Stop Loss

  • Set the stop loss above the Pin Bar arrow.

Exit

  • Close the trade as soon as the Pin Bar indicator plots an arrow pointing up.
  • Close the trade as soon as the Half Trend indicator plots an arrow pointing up.

Half Trend Pin Bar Rejection Forex Trading Strategy 3

Half Trend Pin Bar Rejection Forex Trading Strategy 4

Conclusion

This trading strategy is a simple trend continuation strategy which combines price action, candlestick patterns and a trend following indicator.

This combination of complementary factors can produce high quality trade setups that could help traders consistently produce an income.

The size of the profits may vary depending on the strength of the momentum generated after the price rejection. At times there are small frequent wins. At times there are huge wins that occupy the whole trend. Either way, traders who could identify the right trending markets can earn a profit from these types of setups.

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