What is a Pin Bar?
Pin Bar is a price action or a specific candlestick pattern that traders observe to see price reversals. If a Pin Bar occurs at any given time, it is considered an important signal that can indicate a future price reversal.
Characteristics of a Pin Bar candlestick
A Pin Bar candlestick is similar to a regular candlestick, which consists of the body and the wick. However, the difference is that the Pin Bar has a body that is less than twice the size of the wick of that candlestick. This can occur in both bearish and bullish candlesticks.
The formation of a Pin Bar
A Pin Bar candlestick is formed by the rejection of buy and sell prices in the market, causing the price to stall. This results in the opening and closing prices of the Pin Bar candlestick being close to each other. Pin Bar candlesticks are usually found at the topmost and bottommost parts of the chart. The longer the wick of the Pin Bar candlestick, the higher its reliability.
How to use a Pin Bar
Most traders do not prefer to use it in small timeframes because the signals of the Pin Bar are too frequent. Traders use the Pin Bar in larger timeframes to analyze the overall trading volume and find the most precise entry points.
In an uptrend candlestick, if the candlestick keeps moving up and then a Pin Bar candlestick appears, it means that at that moment, the number of sales is greater than the number of purchases. Traders will wait for the Pin Bar to complete before placing a Sell order in the next candlestick, as they believe that the rejection of the buying price will cause the graph to reverse to a selling trend.
In a downtrend candlestick, if the candlestick continues to move down and then a Pin Bar candlestick appears, it means that at that moment, the number of sales is less than the number of purchases. Traders will wait for the Pin Bar to complete before placing a Buy order in the next candlestick, as they believe that the rejection of the selling price will cause the graph to reverse to the buying side.
