Tag Archives: pinocchio

Pinocchio bar 4H chart Euro

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Maybe I’m trying to force trades, I don’t know but I’m constantly scanning my charts looking for setups. I noticed a pinocchio bar (or shooting star) on the four hour euro chart. We are in a downtrend, so I have the trend behind me however I have a feeling that the fib I have drawn is rather weak.

A weak pinocchio bar setup?

I would much rather the fib was in confluence with the 1.2150 level so I would likely pass on this trade. Trouble with fibs is that if you are itching to take a trade, you can pretty much draw them wherever you like to convince yourself to take a trade. Look, I’ve done it here – look at the amazing confluence and with the trend!:

Oh look, everything is lined up!

So, I’m not really convinced with fibs, where should I draw them? Whenever I want to take a trade? Whenever I want to convince myself that a trade should be taken? Maybe I shouldn’t draw them at all – what’s your experience with them? Useful? Lots of questions…

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High probability pinocchio bar on the Euro

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I’ve been thinking a lot about setups found in Martin Pring’s book on Price Patterns this week. To recap they are:

  • Outside bar lower/upper close
  • Inside bar
  • Pinocchio bar (hammer candle or shooting star candle)
  • Key reversal bar
  • Exhaustion bar
  • Two bar reversal
  • Three bar reversal

Or have a look at the quick reference guide.

Key reversal bar

The key reversal bar is a gap in the direction of the current trend, followed by a close at or near the previous day’s close.

In the below daily chart on Euro futures we have a strong down trend followed by high volume and push up to a 50% retracement level. This bar is a mixture between a classic pinocchio bar/shooting star and a key reversal bar.

Euro futures key reversal bar

The reason I like the look of this so much is that we are in a very strong down trend and the market has made a push up and exhausted itself back in the direction of the trend. The trend is your friend, and when you get nice looking setups like this it pays to take notice.

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