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Introduction to Pin Bars
Pin bar (Pinocchio bar) trading patterns consist of 3 candlesticks which are primarily used to trade market price reversals. Pin bars work on all time frame's and currency pairs. The pin bar itself consist of a small body, small or long upper wick and a small or long lower wick.
Bearish pin bars are represented by : Small bodies, long upper wicks and small lower wicks.
Bullish pin bars are represented by : Small bodies, small upper wicks and long lower wicks.
Examples (Green: bullish, Red: bearish)
Bullish & Bearish Pin Bar Trading Patterns
Trade Entry Conditions
- Bullish Formation: Buy at the close of the third green candlestick.
- Bearish Formation: Sell at the close of the third red candlestick.
Stop Loss Conditions
- Bullish Formation: Place a stop loss 1 pip below the lower wick of the pin bar.
- Bearish Formation: Place a stop loss 1 pip above the higher wick of the pin bar.
Take Profit Conditions
Preferred Method : Risk-to-reward ratio 2.0 or better.
Bullish Pin Bar Forex Trading Strategy (EUR/USD 15 min chart)
A bullish pin bar formation was formed on the EUR/USD 15 min chart. A long trade was entered at the close of the third candle at a price of
1.2768. A stop loss was placed 1 pip below the low of the lower wick at 1.2748 (20 pips risk). According to the take profit rule (2.0 risk-to-reward), our take profit level was set at 1.2808 (40 pips).
Bearish Pin Bar Forex Trading Strategy (GBP/USD 4 hour chart)
A bearish pin bar trading pattern occurred on the GBP/USD 4 hour chart and a short trade was initiated at the close of the third candlestick at a price of
1.6246. A stop loss was placed 1 pip above the high of the upper wick at 1.6300 (54 pips risk). According to the take profit rule (2.0 risk-to-reward), a take profit level was set at 1.6138 (108 pips). The best pin bar formations occur near:
- Strong support and resistance levels
- Major trend lines
- 33.8% Fibonacci levels
- Pivot Point extreme R3/S3 price levels
References:
Download the pin bar indicator for Metatrader 4 >>>
Trading Pin Bar Reversals Price Action Forex Strategy
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