Furthermore, not only were sellers able to bring resistance into the market, but they actually took complete control of price, and a market reversal occurred.
As price reached the top of the wick, sellers were able to come into the market with sufficient supply as to hold off higher prices. When the period opened, buyers took immediate control of the market and pushed price up aggressively. Let’s use the candlestick pictured above. Understanding the story behind the pin bar is essential. Japanese candlesticks offer traders a powerful glimpse into the current market psychology that is driving price, and the pin bar is no different. The result was the formation of the Japanese candlestick. Munehisa believed that human psychology was driving the market, and he wanted to graphically represent this. Japanese candlesticks were formed by a Japanese rice trader named Munehisa Homma during the 17 century. The pin bar, however, is a powerful price action setup that tells a fascinating story concerning price momentum and the possibility of an imminent reversal in price direction.Ī pin bar is a Japanese candlestick that has a long wick on one side and a small body. Now, we know that technical analysis primarily involves the analysis of historical price data, and historical results are not necessarily indicative of future results. A major question in the mind of every trader is where is price headed? In order to do this, traders employ endless types of technical and fundamental analysis in an attempt to identify market momentum and price direction. Essentially, trading involves buying a security at a specific price and then selling that security at a higher price, or selling a security at a specific price and then buying it back at a lower price. The process of trading is quite simple if you boil it down to its most basic element. The Pin Bar: A Powerful Price Action Reversal Pattern
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