The initial pin bar indicated a strong reversal from a downtrend to an uptrend, providing a clear entry signal for traders. In a bullish pin bar, prices initially trade drastically lower, creating a significant drop from the opening price. However, as time progresses, buyers rush in, reversing the downward momentum. This buying pressure drives the price back up near the opening level, resulting in a small body near the top of the candlestick and a long lower wick. Hammers are a type of bullish pin bar pattern that form after a sustained downtrend, signaling potential capitulation at the lows with rejection pointing to reversal pattern up. A pin bar is a candlestick pattern with a long tail or wick relative to its body size.

In my price action trading course, I actually discuss how to quantitatively break down a pin bar as we have tested over 10yrs worth of data on over 15 pairs, totaling over 100,000+ pin bars. A fake or false pin bar is one that appears to signal a reversal or continuation but is quickly negated by price action moving against it. One advanced pin bar trading technique is to look for alignment across multiple timeframes. When a pin bar on a higher timeframe (e.g., daily) aligns with one on a lower timeframe (e.g., 4-hour), it can provide an even stronger trading signal.

Putting stop loss too close to the entry

A pin bar entry signal, in a trending market, can offer a very high-probability entry and a good risk to reward scenario. If you’re using a pin bar strategy that is based on graph reversals, pin bars can help you. They are easily determined, and if you take into account other signals, you can catch the very beginning of the new trend.

Rules For Long Setups

The long lower tail signals that sellers controlled the start of the session but gave back some ground to buyers before the close. Thus as we can see, the pin bar formation is a strong price action pattern communicating a rejection of sorts in finding tops and bottoms, telling us a counter-trend move is likely to begin. Basically, a hammer is a specific type of bullish pin bar that forms after a downtrend. All hammers can be considered pin bars, but not all pin bars are hammers. It’s worth noting that the strength of a bullish pin bar can vary depending on its specific characteristics. But what exactly is a pin bar, how do you identify one, and most importantly, how do you trade it effectively?

In this case, in case of a bearish pin bar, they usually set a buy-stop above the upper shadow. First, there are continuation candles that send a picture that an asset’s price will continue moving in the existing direction. A good example of a continuation pattern is the three white soldiers pattern. When it forms, it usually sends a sign that the bullish trend will go on.

A pin bar candlestick pattern should be traded in confluence with the predominant market structure, directional bias, and technical levels. Going against the primary trend solely on a pin bar tends to end badly. Like bullish pin bars, the strength of a bearish pin bar can vary depending on its specific characteristics. Like the pin bar pattern, the bullish hammer candle has a small body and long wicks.

The lowest price of the retracement between April 2021 and June 2021 was marked by a bullish pin bar, signalling a potential reversal. This pin bar formed at the key support level around $28,800, with a long lower wick indicating strong pin bar trading rejection of lower prices. Following this pin bar, Bitcoin’s price surged approximately 132%, climbing from $28,800 to it’s all-time high of $67,000. Pin bars are a powerful candlestick pattern used widely for reversal pattern trading across all financial markets. With their visually distinct shape forming at key support and resistance levels, pin bars act as early warning signals that a turnaround may be imminent.

Identify Profit Targets

There are several ways to enter a trade when using pin bar trading strategies. The levels are derived from the various ratios of the Fibonacci sequence. But the significant ones include 38.2%, 50%, and 61.8%, which normally act as support and resistance levels in a trend. It’s interesting to note that when the price breaks above a resistance level in an upward trending market, that level becomes a support level as you can see in the chart below.

This article discusses this pattern and developing a Forex pin bar strategy. Moreover, pin bars are not the only candlestick patterns that indicate price rejection. Trading Pin Bar Signals with Support and Resistance Confirmation, is perhaps one of the most effective ways to trade forex, if not thee most effective way to trade. Below, we will show some examples of trading pin bars from key levels. Follow along closely because this is likely to be one of the most powerful Forex trading strategies you will ever learn. A great example of a bearish pin bar pattern can be seen on the APPL stock on 1st of May 2019.

• If it’s an uptrend, then wait for the price to come to your area of value (it could be SR or dynamic SR).
• But if you’re just solely waiting for this kind of pin bar patterns.
• Let’s look at the setup below, which is the exact same setup we looked at before, only this time we’ll start identifying our “factors” of confluence.
• The choice of moving average depends on the timeframe you are trading.
• Intraday scalpers can trade pin bars successfully on 1-minute charts while long term investors spot them on weekly charts.
• For example, in the case of the pin bar shown above, you could add a moving average on the chart.

Even valid pins can end up stopped out if no actual reversal occurs and the pin bar forms a continuation pattern in the existing direction instead. Pin bars at key support levels have a long lower tail and signal bullish rejection – the buyers stepped back in as the bears tried to push it lower. The bullish pin bar candlestick appears at the bottom of a downtrend and signals a potential bullish reversal. In terms of time frames for trading pin bars, they really can be traded on all time frames from the 1min, to the weekly chart.

Key Differences Between Pin Bars and Dojis

This formation indicates a potential bearish reversal, as it shows that buyers were unable to maintain higher prices. This significant drop, as shown on the weekly timeframe below, illustrates the powerful predictive nature of pin bars when they appear on higher time frames. The bearish pin bar marked the end of Zoom’s bullish trend and the start of a prolonged bearish phase. ​​Range trading involves identifying key support and resistance levels where the price oscillates within a horizontal channel. Both items together illustrate a severe rejection of prices at some point during the trading period. The tail of the pin bar should be much longer than the body, often at least three times the size of the body.

“95% of all traders fail” is the most commonly used trading related statistic around the internet. By using the 50% entry strategy we were able to enter long with a 70 pip stop loss. Both of these setups were highlighted as they formed inside of the Daily Price Action private community. This is my preferred method as it provides me with a much more favorable risk to reward ratio.

Master ICT 1st Presented Fair Value Gap and ICT Opening Range 2025

Here a pin bar and outside bar (engulfing pattern) form adjacent to each other at swing points, combining signals to highlight major turning points. Wait for next candle confirmation to fine tune entry and reduce whipsaws. Use limit orders to enter on retest of pin bar area or tail/body breach. The bearish hanging man appears during a sustained uptrend, signaling the rally may be nearing exhaustion as sellers come back in on approach to resistance.

In this way, traders can find key entry points on the Elliott Wave structure such that their trades are not only compatible with the trend but with the wave pattern as well. Set your profit targets using key support and resistance levels, Fibonacci retracement levels, or trailing stop loss.. Using multiple profit targets may help you lock in some gains while letting the rest of the position ride if the trend continues to work out. Following the appearance of the bearish pin bar, the price of gold continued to drop by approximately 5%.

• The Doji frequently appears in ranging markets or during periods of uncertainty, making it less actionable without additional context.
• They detect classic patterns quickly, and then the algos position against the crowd.
• For a candlestick to be considered a pin bar, the wick must be significantly longer than the body, typically at least 2-3 times the length.
• When price approaches the support zone wait for the closing of candlestick and formation of a Bullish Pin Bar candlestick.
• Below are three things that must be present in order for this pattern to be considered tradable.

What is Pin Bar Candlestick?

Whatever method you want to use, you must wait until the pin bar has closed before placing a trade, to be sure it’s a pin bar. The AUD USD chart below shows a market that is gradually trending up and frequently making pullbacks to the 21-period moving average. The real body is small and located near the upper end of the candlestick and can be of any color. A pin bar usually sends a message that a reversal may be about to form in the market.