Best ‘Pin Bar’ Forex Trading Strategy 2020|How to Trade Pin Bar Reversals – Price Action Trading

Forex Trading Strategies
Best ‘Pin Bar’ Forex Trading Strategy 2020|How to Trade Pin Bar Reversals – Price Action Trading
The Pin Bar Setup
I bet you have seen many pin bars on your Forex charts. Maybe you haven’t been aware that you are looking at a pin bar formation per se, but you most likely have come across this candle:
Pin Bar Structure
Above you see the structure of the pin bar candlestick pattern and its four variations. The candle’s unique structure includes a long candlewick, a small body, and a small candlewick opposite the long candlewick. An important rule for identifying a pin bar is that the long wick should comprise at least 2/3 the size of the entire candle. Some traders find it useful to program a Pin Bar indicator in Metatrader or their preferred trading platform to make it visually easier to spot on the chart.
Many traders believe that the name “Pin Bar” comes from the pin like or needle like appearance of the candle. Actually, the name “Pin Bar” is short from “Pinocchio Bar” which was popularized by Martin Pring in his book “Technical Analysis Explained”.
The pin bar candle can be seen frequently on a Forex chart. However, the best tradeable pin bars are usually located at the end of an impulse wave, and extends outside of the preceding price action. When traders see a pin bar sticking out above or below the recent price action after a prolonged move, they could prepare to trade contrary to the trend attempting to catch the reversal price momentum.
Pin bars can be thought of as a price rejection zone, where major market participants have rejected price from staying at a particular price level. Before the price action closes a pin bar, the candlewick has initially been part of the candle’s body.
In this manner, before being completed, the pin bar candle has seen a large body in the direction of the trend. This creates the impression that the trend might continue with strength. However, contrary pressure appears and the candle closes near its open level, which ultimately appears as a big candle wick. Typically “The bigger the nose (wick) the bigger the lie”, referring to the unsuccessful big candle body, which has ended up being a wick. This is where the “Pinocchio” name comes from. Therefore, the bigger the wick the pin bar has, the stronger the reversal pressure is expected to be!
Bullish Pin Bar
A valid, tradeable bullish pin bar is located at the end of a bearish trend and its lower candle wick goes below the overall price action. If you spot a bullish pin bar setup on the chart, this will setup a nice opportunity for a long position.
Bearish Pin Bar
The same is true for bearish pin bars but in the opposite direction. The bearish pin bar is located at the end of a bullish trend and its longer candle wick is the upper area. In this manner, the longer wick is sticking out above the price action. The bearish pin bar is usually a good sign of an upcoming price reversal in the bearish direction.

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