As a special candlestick with many meanings in trading, Pin Bar is the name that always makes every trader study and learn when trading Forex. This article is for you – those who are looking for the most accurate and easy-to-understand approach to Pin Bar candlestick.
After reading this article, you will learn what Pin Bar candlestick is. You will also know the meaning and the most effective way to trade Forex with Pin Bar.
What is a Pin Bar candlestick in Forex?
When entering the financial market, the first thing you see is the Japanese candlestick chart. It has distinct shapes that reflect the price action of the market. And among them is a very different candlestick that looks like a pin – Pin Bar candlestick.
It is called Pin Bar because it looks like a pin. This candlestick has a prominent long wick, a small body, and with or without a small tail (Pin Bar nose).
To confirm a candlestick is a Pin Bar in Forex, it must consist of the following characteristics:
– Tail (aka wick or shadow): The Pin Bar is a candlestick with a long upper or lower tail. That is the highlight of a Pin Bar candlesticks that show a strong rejection of prices. A Pin Bar must have a tail that is at least 2/3 of the length of the candlestick bar. The longer the tail is, the higher the accuracy of the Pin Bar is.
– Body: The zone between the opening and closing prices is called the candlestick body. The body should not exceed 1/3 of the candlestick length. Opening and closing prices are close to each other and may also be equal.
– Pin Bar nose: the opposite part of the tail. A Pin Bar does not necessarily need a nose. Sometimes, the Pin Bar doesn’t have a nose because it opens and closes right at the closing price of the candle. The smaller the Pin Bar nose is, the better it becomes.
– Pin Bar is a price signal indicating price rejection. From there, it shows that the possibility of a price reversal in the direction of the Pin Bar body is very high.
Two common types of Pin Bar
There are two types of Pin Bar candlesticks that you need to pay attention to when they appear on the chart: Bullish Pin Bar and Bearish Pin Bar.
+ Bullish Pin Bar: This is a Pin Bar with a long downward tail and an upper body. They usually appear at the end of downtrends and serve as a warning signal for prices going up in the future. In addition, it may also appear in an uptrend as a signal of trend continuation.
+ Bearish Pin Bar: This is a Pin Bar with a long upward tail and a lower body. They usually appear at the end of uptrends and serve as a warning signal for prices going down in the future. In addition, it may also appear in a downtrend as a signal of trend continuation.
How to trade Forex & Win with Pin Bar candlestick
Pin Bar itself is a very powerful price signal which is enough for you to open exact reversal orders in Forex. In this section, I will show you how to place Forex orders following this strategy. Here are the basic trading strategies for you to get acquainted with Pin Bar. In the following articles, I will bring you more advanced trading strategies.
Below are principles for trading Forex with Pin Bar candlesticks.
+ Bullish Pin Bar appears: Focus on opening a BUY order.
+ Bearish Pin Bar appears: Focus on opening a SELL order.
Open a BUY order in Forex with the Bullish Pin Bar candlestick as follows:
+ Entry Point: As soon as the price finishes creating a Bullish Pin Bar candlestick (green).
+ Stop-Loss: At the tail of the Bullish Pin Bar.
+ Take-Profit: when the price touches old resistance levels that have been formed in the past.
Open a SELL order in Forex with the Bearish Pin Bar candlestick as follows:
+ Entry Point: As soon as the price finishes creating a Bearish Pin Bar candlestick (red).
+ Stop-Loss: At the tail of the Bearish Pin Bar.
+ Take-Profit: when the price touches old support levels that have been formed in the past.
Notes when using this candlestick pattern
+ The longer the candle time period of the Pin Bar candlestick (Japanese candlesticks chart) is, the higher the accuracy becomes.
+ The shorter the nose is, the safer the Pin Bar becomes. Candlestick’s tails should be as long as possible. The body of the candle is short, lying completely on one side or the bottom of the candlestick bar.
+ To increase the accuracy of options, you should combine the Pin Bar with trend indicators. Open long trendy orders to achieve the highest level of accuracy.
There will be many more classic Forex trading strategies with Pin Bar candlesticks that will be introduced by me in the following articles. Pin Bar is a classic candlestick pattern that is part of the trading strategy of many successful traders. Get acquainted with this candlestick pattern today on a Demo account.