Tail poles are the main bars in a price chart. Plain and simple. The reason they are so important is that they often give us a very strong indication of what the price might do next, more than any other type of price bar.
Today's lesson is a summary of my favorite patterns for chandeliers. These are the same patterns that I look for when I analyze the charts and that I trade regularly. You will learn what these patterns look like and how to identify them and what they mean. This is a great introduction to various candlestick strategies for beginner tail bars, but also an excellent refresher for those who already have a basic idea of how I trade and what I look for in the charts every day.
This lesson assumes that you understand the basics of candlestick charts and candlesticks. If you are not too familiar with this topic, please read my candlestick chart tutorial for more information. I won't go into specific entrances and exits with the patterns discussed today as this is a whole topic in itself, but I will explain this in detail in other articles and in my courses on trading in price promotions.
Now let's get to know some of the best patterns for trading tail candlesticks.
What are tailpoles?
A tail rod is somewhat subjective in nature, but what I mean when I speak of "tail rods" is a rod with a tail that is noticeably longer than the body or the real body (area between the opening and closing prices).
The bars on price bars, sometimes referred to as shadows or wicks, are important to decipher because they show and imply. They show the rejection of a level or a price range and either a small, medium or large reversal that happened fairly quickly. This shows us that fatigue has occurred in the area where the tail has formed, which has a big impact. If we see that an area price is exhausted, it means that something is happening that we have to take note of. This tail shows us that either buyers really wanted to buy there or sellers really wanted to sell, why it doesn't really matter, we only care about what and how.
A tail on a pole implies that the price may be moving in the opposite direction and soon. This is obviously a huge piece of data for a price trader, and you can honestly base your entire trading approach on tail bars if you want. Daily chart bars are the most important bars in my opinion, and therefore daily chart tail bars are the most important bars of all. If you don't know why daily charts are so important, please read my tutorial on trading daily charts before proceeding.
Even if we don't have an extremely clear price action signal like (my favorite) a pin bar pattern or maybe a wrong pin bar combo signal, we can still collect an enormous amount of information from simple tail bars, which we will use will soon be over.
In short, Tailed Price Bars are your friend, maybe your BEST FRIEND in the market, and I suggest you get as close to them as possible, you have to fall in love with them and I suggest you make them what you are are masters of being successful in trade.
Examples of candle patterns with tailpoles:
The classic pin bar candlestick pattern
The pin bar candlestick pattern is a tail bar that shows a sharp price reversal over the period of the chart. A pin bar on a daily chart therefore shows a strong price reversal during this daily period, while a 1-hour pin bar shows a price reversal over a period of 1 hour. The higher the time frame, the more weight a signal has or the more important it is.
The pin header typically has a much longer tail than the body, the body is the distance between opening and closing. The tail of a pin rod should be at least 2/3 of the length of the entire rod, ideally 3/4. Sometimes there is little or no body, as in the second pin headers shown below. Here are examples of a few different-looking pin headers, both of which have the same meaning. A price reversal has occurred, which is represented by the long tail. The implication is that the price can move in the other direction, opposite to the tail …
- Here is a practical example of the classic candle pattern with pins:
The long-tailed Pin Bar Candlestick Pattern
A long-tailed pin-bar pattern is exactly what its name suggests. a pin with an unusually long tail. These are perhaps the most important bars in the entire trade, and they are rare. If you see a long tailed pin header, stop and keep this in mind as this is a big hint that the price will fluctuate the other way. Long-tailed pins often mark large changes in direction on the market and even large changes in trend.
Long-tail pin headers usually have a smaller real body than a classic pin header. Their tails are always significantly longer than all nearby bars and therefore cannot be overlooked. They are sometimes good candidates for 50% traceability according to my trade entry trick strategy. Here are some examples of ideal looking long-tailed pin headers. For those of you who are new: bullish means a potential buy signal and bearish means a potential sell signal …
- Here's a real-world example of a long-tailed candle pattern with pins:
- Another example of a classic long-tail candle pattern with a pin header:
Double pin bar candle holder pattern
It is not uncommon for consecutive pin bars to form in a market, often at key support and resistance levels, as the market "tests" these areas to determine which party is between the bulls and bears (buyers and sellers) will win. You will see double pin sticks or two pin sticks in a row more often, but I've even seen three in a row, but that's rare. Double pencils are very important to note, as they are formed in the right market context and, when confluent, can be an obvious warning signal that the price will rise in the other direction. This is how they look …
- Here's a real-world example of a double-pin candle pattern:
Note: You may find that the price barely violated the lows of the double-pin bar pattern shown. This happens sometimes, so you need to thoroughly understand the correct stop loss placement for your trades before you start trading live. The right stop loss, a big enough one, would have kept you from being stopped before trading became a huge winner …
Small tail poles and long tail poles (no pin poles)
The following diagram shows what I simply call "tail poles". These are bars with significant tails, but they are not perfect enough to be considered a “pin bar signal”. As I said in the opening; Tails are often significant, so we have to consider each tail rod as potentially influential in the short-term market direction, even if they are not perfect pin rod signals. In my course I dedicated a whole new chapter to this “phenomenon” of the tail pole.
- The following table shows a rather "classic" tail bar. This was a bullish tailed bar that formed at a support level within an overall uptrend market. we can see that it leads to a sharp increase. Note that it was not a bullish needle bar because the lower tail was not long enough in relation to the body and the upper tail was a little too long. Still, the lower tail was long enough to classify that it had a "bullish tailed bar" …
- In the next picture you can see the differences between a long and a small tail rod and classic pin header patterns …
Other candlestick chandeliers
There are other tail bar patterns that I'll cover in more detail in my course. But first, let's take a quick look at some of the most common ones.
Below you can see a pin header within the combination pattern of the bar. Here a pattern of the inner bar is formed after a pin header and within the pin structure. Next you see a pattern of the inner pin header. Don't get confused now. This is not the same as the previous combination pattern. Here you have a pin header that is ALSO an inner bar, so an inner bar pattern where the inner bar is a pin is essentially treated as a pattern of the inner bar with a little extra "weight" because you use that pin as an additional piece of confluence. Finally, we have a fakey pin bar combo setup where the fakey or false break part of the fakey pattern is also a pin bar.
- Below we see a real example of a bearish pin header within the bar combination pattern. This led to a sharp decline, as the pattern implied. Also note the following bearish bar, another nice sell signal in this downtrend …
- Here is a practical example of a combination candle pattern with an inner pin:
- Here's a real-world example of a fake pin bar combo candle pattern:
I hope you enjoyed this tutorial on chandelier candle patterns and what they mean. It was a brief introduction to these patterns, but you should have learned enough to identify them in the diagrams and practice on your demo account.
In my comprehensive course on mastering price action trading, I deal in more detail with these patterns and much more. We delve into how trades are entered using these patterns, identify the correct chart context in which to enter them, confirm our entry and understand how the signals are filtered under different market conditions. In fact, I teach you to read the charts from left to right, much like reading a book that is a key element in profitable trading.
What do you think about this lesson? Please let us know in the comments below!
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About Nial Fuller
Nial Fuller is a professional trader and author who is considered the "authority" to trade price promotions. It has a monthly readership of more than 250,000 dealers and has been teaching more than 20,000 students since 2008. In 2016, Nial won the Million Dollar Trader Competition. Checkout Nial's professional trading course here.