Pin bars are a simple price action candlestick pattern that can indicate a strong imbalance of supply and demand that can be used on any currency pair or other instrument. Used in conjunction with support and resistance or other technical analysis tool to give you trading context, pin bars can give excellent trade entries with an obvious stop loss position.
Any trading strategy that uses a pin bar would be well served to use a pin bar indicator for ease of scanning for trades. Price looks for areas of liquidity as a matter of course and the pin bar just indicates when liquidity was found. Specifically, the shadow is a pin and the body is small.
It is the long shadow or tail we are looking for. The pin bar tail tells us a story. Using a bullish pin bar as an example, price opens and bears take control and drop price lower. Once price reaches a certain area such as a support area, the bulls take over and drive price back up towards the opening price. This has the effect of wiping out the bears that shorted. This is a simple illustration. Price may have taken a few different roads to end at the close where it did.
Take note of 1. This is one pin bar strategy you can use where price drops to a support area and is then rejected forming a pin bar. This trading strategy may have you entering at the market upon close and placing your stop below the low of the pin bar candlestick. The new versions of Metatrader make it very easy to install any custom indicator into the indicators folder. Pin bars, show a drastic change in market sentiment and when you see pin bars forming in areas of support or resistance levels, or Fibonacci levels or pivot levels, you should take note.
Take for example a bullish pin bar… it has a very long tail…do you know what caused it to have such a long tail? So, the greatest advantage of trading with pin bars is the fact that you see who is in control by using the price action of the pin bar.
As shown in this graphic again, we want to only trade pin bar reversals in certain locations on the chart as we do at the number 1 below which indicates a support area.
Pin bars are just as valid at resistance which makes them great for a support and resistance trading strategy. We also want to look at a higher time frame chart like a 60 minutes, four hour, daily charts to spot a pin bar in the Forex market. There is a lot of noise trading on lower time frames and any bar formation is much more reliable on a higher time frame chart. In fact, you can use a pin bar in many of the swing trading strategies featured on this website as a means of a trading entry.
There are a few pin bar indicators you can download but the best one I think is the one you can download here. We are using this indicator as a scanning tool only. Your pin bar trading strategy is what is important. Pin Bar Indicator Download Pin bars are a simple price action candlestick pattern that can indicate a strong imbalance of supply and demand that can be used on any currency pair or other instrument.
We call this a pin bar reversal. It is possible for: Bulls take over at the open driving price higher Bears step in and drive price lower Bulls regain control and close the pin bar above its close Take note of 1. The key to trading the pin bar is also understanding how and why it forms.
Pin bar opened up and possibly would have moved up and formed a high just above its opening price Bears Sellers came in with such ferocity and took the price down to form a low way below the opening price.
Bulls Buyers came in also with such ferocity and took the price up from it low all the way up to close a few pips below its opening price or close a few pips above its opening price. Where else can your trade pin bars? Fibonacci levels Trend line touches Pivot levels In fact, you can use a pin bar in many of the swing trading strategies featured on this website as a means of a trading entry. Posted in Swing Trading Indicators Tags: Forex Swing Trading Strategy 6: Powered by WordPress Designed by:More...