Understanding the Pin Bar Reversal
By: Johnathon Fox
The Pin Bar Reversal is a Price Action signal that can be found on nearly all markets and time frames. The term Pin Bar or Pinocchio Bar was originally termed by Price Action trader Martin Pring because of the Pin Bars long nose. The Pin Bar will often catch traders trying to play a breakout before snapping in the opposite direction and stopping them out. Pin Bars are excellent for catching reversals in markets and also for entering trades with the trend from pullbacks.
A Pin Bar formation must have the following:
- Open and close within previous bar
- Candle wick minimum 3 times the length of the candle body
- Long nose protruding from all other bars (must stick out from all other candles)
Bearish Pin Bar Example
The Pin Bar can be traded with or against the trend. Quite often you will find Pin Bars will be the catalyst for the market trend changing directions.
Bullish Pin Bar Changes The Trend
When learning to trade the Pin Bar it is advisable that traders only enter with the obvious trend in their favour. Trading against the trend can be extremely difficult. The new trader must first learn how the markets operate and also how to trade within a trend before attempting to trade against the trend.
Pin Bar Example With The Trend
Once traders have a firm grasp of what the Pin Bar looks like they will begin to notice them popping up all over their charts. This does not mean every Pin Bar should be traded. Not all Pin Bars are created equal.
The best Pin Bars are the ones that form after a pullback in the market. Pin Bars that form without a pullback in the market can be dangerous. Pin Bars are reversal signals and traders need to look for them from swing points or pullbacks in the market. Pin Bars are not continuation signals and to try and trade them as such is not advised.
Pin Bar From Pullback In Market
Pin Bars can be a very powerful Price Action signals when traded from the correct areas in the market.