What is the Popgun Bar Pattern?
The Popgun bar pattern is a candlestick pattern that portrays a change of range from price range contraction to price range expansion.
It comprises an inside bar followed immediately by an outside bar.
But what are the inside bar and outside bars?
The inside bar is a candlestick whose whole dimension is overshadowed or engulfed by the candlestick immediately before it.
The outside bar, on the other hand, is a candlestick whose dimension overshadows or engulfs the whole dimension of the candlestick immediately before it.
So how will the Popgun bar pattern look like?
It consists of three candlesticks.
The first engulfs the next wholly, making the second an inside bar.
The third candlestick then engulfs the same second candlestick (inside bar) wholly, making the third an outside bar.
Now, the third candlestick of the pattern or the outside bar is the trigger in trading the setup.
If the outside bar is bullish, then such Popgun bar pattern is bullish but if the outside bar is bearish, it makes such Popgun bar bearish.
But there is more to this as we shall come to know, for it depends on the context in which the popgun bar pattern is used.
Yes, that is basically it on what a Popgun bar pattern is.
You must be wondering how to make money trading the pattern in Olymp Trade with this pattern, right?
In this post, I will teach you exactly how to earn profits after profits in Olymp Trade, trading the Popgun bar pattern.
Making Money Trading the Popgun Bar Pattern in Olymp Trade.
I now want to take you through what you need to do with the Popgun bar pattern in Olymp Trade in order to make money.
Before we proceed any further though, I want to make some clarifications on the Popgun bar pattern.
The candlestick pattern can be used in two broad ways or contexts namely:
- With-the-trend Trading.
- As a Trigger in Other Trade Set-ups.
A. Trading the Popgun Bar Pattern With-the-Trend.
One of the two ways of using the popgun bar pattern is with-the-trend trading.
Here, the Popgun bar pattern is used as a trend continuation signal to take trades in the direction of the trend.
Here are the simple steps to follow for the Popgun Bar Pattern With-the-trend Trading:
Establish the Market Trend.
You must first establish the trend direction if you are trading the Popgun bar pattern with-the-trend.
The direction and strength of a market trend can be established by using price action or indicators.
A market that shows an upward price momentum and whose downward price retracements respect moving averages pointing upwards is an uptrend.
However, a market rapidly falling and whose upward price retracements respect moving averages pointing downwards is a downtrend.
Identify the Popgun Bar Pattern.
In an uptrend, you expect a bullish Popgun bar pattern. A bullish Popgun bar pattern has a bullish outside bar.
However, in a downtrend, you expect a bearish Popgun bar pattern. A bearish Popgun bar pattern has a bearish outside bar.
Enter Buy or Sell Position.
A bullish Popgun bar pattern on a significant uptrend is a buy signal.
However, a bearish Popgun bar pattern on a marked downtrend is a sell signal.
Adjust Stop Loss.
The outside bar of the pattern indicates which direction the price range expands towards.
It is therefore highly unlikely that an expansion upwards will be followed by a downward price move and vice versa.
Placing the Stop Loss for buy position just below the low of the outside bar and that for sell position just above the high of the outside bar is the best.
You will be kicked out of the trade early in case of any error, anyway.
Adjust Take Profit.
If there is a manner of taking profits you should not apply here is the use of Trailing Stop Loss.
The Popgun bar pattern retraces significantly and therefore you might be kicked out of an otherwise winning trade prematurely.
Apply a logical risk to reward ratio of at least 1:2 and let the trade run.
B. Trading the Popgun Bar Pattern as a Trigger in Other Trade Set-ups.
The second way of using the Popgun bar pattern is to confirm other trade set-ups. In this case, the Popgun bar pattern is used as a trigger to confirm entries for trades.
The Popgun bar pattern can be used to confirm entries in many trade set-ups. These include:
Popgun Bar Pattern as a Pullback Trading Trigger.
In a healthy trend, pullbacks or retracements are common occurrences.
They may resemble trend reversals at first, but the Popgun bar pattern comes in handy to distinguish the two.
A healthy uptrend has downward retracements which never go below MA 50.
Now, when these retracements of a healthy uptrend near MA 50 from above, you can start watching out for a bullish Popgun bar pattern.
If the Popgun pattern is bullish in that the outside bar is bullish, then such is confirmed as a pullback and not a downward trend reversal.
You can buy at the close of the outside bar.
A healthy downtrend shows pullbacks that don’t go above MA 50.
You can start hunting for a bearish Popgun bar pattern when the retracements of the healthy downtrend near MA 50 from below.
A bearish Popgun bar pattern has the outside bar bearish, confirming such as a pullback and not an upward trend reversal.
A perfect sell entry is at the close of the outside bar.
Popgun Bar Pattern as a Range Trading Trigger.
You agree with me that even when the support or resistance level is very strong, you are never sure if the price is really going to respect or break it.
But here is a pattern that can actually help you to be sure that the price is really going to respect that support or resistance level.
Well, you need to identify significant support or resistance levels, which are not from one to a few candlesticks apart, creating a congested price zone.
After doing so, you can then observe how the price behaves at the Support and Resistance levels to trade the range.
To be sure that the price will respect a resistance level and therefore enter a sell trade, a bearish Popgun bar pattern is enough.
If the price rises to the resistance level and then a Popgun bar pattern with a bearish outside bar forms, be sure to sell.
On the other hand, a bullish Popgun pattern at support is a sure signal that the price will respect that level.
If a Popgun bar pattern with a bullish outside bar develops, then you can buy.
Popgun Bar Pattern as a Chart Pattern Trading Trigger.
The Popgun bar pattern can be used as a trigger in almost all chart patterns.
This includes both bullish and bearish signal chart patterns.
The Popgun bar pattern has widely found its application when confirming double top and double bottom chart patterns.
The double top chart pattern is a bearish reversal chart pattern with two price peaks of almost equal height.
On the other hand, the double bottom chart pattern is a bullish reversal chart pattern with two price troughs of almost equal depth.
A bearish Popgun bar pattern occurring at the second peak of the double top pattern is confirmatory to a bearish reversal.
You can enter a sell trade if you spot a Popgun bar pattern with a bearish outside bar as the second peak develops.
On the contrary, a bullish Popgun bar pattern at the second trough of the double bottom pattern confirms a bullish reversal.
A buy trade is most appropriate if a Popgun bar pattern with a bullish outside bar is spotted during the development of that second trough.
Go ahead to grow your account using this simple pattern.