The question “what is pin bar?” is frequently asked by newcomers to the forex market. The pin bar is super easy to identify on the forex chart because it is the simplest candlestick pattern to recognize.
The pin bar can be found on all time frames; but, in my experience, it works best on higher time frames.
The Japanese candlestick best illustrates the pin bar visualization on the chart compared to the other two price visualizations; line chart and bar chart.
Pin bars can form in both bullish and bearish markets, and when they do, they should not be traded in isolation; instead, search for other market structures or candle stick pattern confirmations that support the pin bar before entering a trade.
The steps outlined above will assist you in filtering out fake pin bars.
Table of Contents
HOW DO I FIND PIN BAR?
Pin bar is pretty easy to find.
To find a pin bar, look out for candlestick pattern with a long wick and a small body. In my experience it is much more effective when pin bars are found at the end of a trend; the pin bar can be found at the end of a trend indicating a reversal, and it can also be found at a continuation trend after a retracement.
If you know how to use the Fibonacci tool, pin bars can also be found at key Fibonacci retracement and reversal levels.
WHAT IS PIN BAR
A pin bar is made up of one price bar, generally a candlestick price bar that signals a strong price reversal and rejection.
The area between the pin bar’s open and close positions is referred to as its “real body,” and pin bars often have smaller real bodies in relation to their long tails.
They are the simplest candlestick pattern to recognize.
RELATED: PIN BAR REVERSAL
HOW DO YOU TRADE WITH PIN BARS?
It is no doubt that pin bars are powerful candlestick patterns, however, they should not be traded in isolation because there are many cases of failed pin bars in the forex market.
That being said, this is how to trade pin bars.
- Look out for pin bars that appear in support and resistant zones
- Over bought and over sold zones
- An engulfing or bullish/bearish candle that supports the pin bar.
See the image below;
HOW IS PIN BAR FORMED?
A pin bar is formed when there is a price rejection possibly at key resistant and support zones; this price rejection indicates a large volume of buyers or sellers in the market possible pending orders.
To put it in simple terms, when there is a large volume of (pending) orders in a key support or resistant zone and price reaches that zone; and the pending order is triggered across all brokers and traders, then a pin bar can be formed.
WHAT DOES A BULLISH PIN BAR MEAN?
A bullish Pinbar means that lower prices are being rejected. The lower wick of the pin bar candle indicates that the bears were in dominance earlier but were eventually overpowered by the bulls.
This bullish pin bar is common in the forex market at oversold and support levels and they are seen across all timeframes, however it is more effective on higher timeframes.
PIN BAR FOREX
The pin bar is the easiest candlestick pattern to identify because of it unique long wick and small body. Because the pin bar is a power reversal candle, this does not mean that all pin bars are tradable as there a many failed analysis after a pin bar formation.
This is why pin bars in forex are not traded in isolation.
Here are tools and confirmations to use when trading pin bar forex.
- Fibonacci tools
- Support and resistant levels
- Over sold and over bought
- Demand and supply levels
- Bullish/bearish candle engulfing
- Multiple timeframe analysis
BEARISH PIN BAR
A bearish Pinbar means that higher prices are being rejected. The higher wick of the pin bar candle indicates that the bulls were in dominance earlier but were eventually overpowered by the bears.
This bearish pin bar is common in the forex market at overbought and resistant levels and they are seen across all timeframes, however it is more effective on higher timeframes.
PIN BAR VS HAMMER
The argument of pin bar vs hammer has lingered for a long time among forex traders, in this article you are going to know in lay mans term the difference between pin bars and hammers.
The pin bar is a more generic term to use for any candle with a long wick and a small body whiles the hammer is a bullish candlestick pattern that implies a trend reversal.
A Bullish Pin Bar is the Pin bar version of this.
In theory, they are the same thing; in my years of trading, I have noticed that older traders refer to it as a hammer, whereas newer traders refer to it as pin bars.
PIN BAR TRADING STRATEGY
When used correctly, the pin bar trading approach can be extremely effective.
In the forex market, not every pin bar should be traded because there are many failed pin bar setups due to incorrect application.
You will know the best pin bar setups to take at the end of the post since they will align with the market structure at the moment of entry.
To have an effective pin bar trading strategy, here are key points to look out for;
- Pin bars are much better on key support and resistant levels
- Fibonacci retracement and reversal levels
- Better pin bars on higher timeframes
- Over bought and oversold levels
PIN BAR PATTERN
A pin bar pattern is a Japanese candlestick that indicates a quick price rejection at a lower price; the pin bar pattern is one of the most effective reversal candlestick patterns every trader should know.
The pin bar pattern can be recognized with it long wick and small body. It can be formed both in down and up trend.
After a pin bar pattern formation, you will need an extra confirmation before entry.
TYPES OF PIN BAR CANDLESTICK
There are basically two types of pin bar candlesticks;
BULLISH PIN BAR: it has a lower long wick and a small candle body.
BEARISH PIN BAR: it has an upper long wick and a small candle body.
As a trader, make sure your pin bar strategy is in line with the real-time market structure before you trade it. Through my years of trading I have seen that when pin bars are implemented correctly, the returns are fantastic.