EUR/USD Pin Bar Retracement Entry – Example 2

Filed under: Learn Forex Trading |

Figure 2 shows yet another good example of a pin bar retracement entry on the EUR/USD forex currency pair. This time, the pair is in a very strong trend, with the 8-day exponential moving average crossed below the 21-day exponential moving average and a very powerful bear trend is in place. A nice little pin bar formed on the way down in this trend, which came at a minor area of support/resistance, and also a rejection of the 8-day exponential moving average. Although this is a little bit of a high-risk entry (due to the pin bar being quite short), the potential for profit was massive and as such, was worth taking a punt, so to speak.

 

Figure 1.

Figure 1.

I put an order in to go short at a 50% retracement of this pin bar, with a stop loss placed just a few pips above the high of the pin bar, and no target set at all – intending to manage the trade depending on what price action tells us. As you can see, this order was filled, and price started to move down very nicely indeed. However, you will see a bullish candle at the bottom of the chart, and at the close of this candle, I moved the stop loss to just a few pips above the high of this candle, which was subsequently hit for a profit of over seven times the risk. This is a very good way to get an entry in a trending market, and to make some big profits. The general rule of thumb is, the shorter the pin bar – the higher the risk; but also, the shorter the pin bar, the tighter the stop loss and the more potential there is for larger profits. It is a delicate balancing act.

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