Trading Strategy 201: Pin Bar Candlestick Reversal Strategy

Pin bars are one of the most popular price action trading strategies.

They show a clear rejection of a price level and are often followed by a large directional move opposite the direction of the rejection.

However, it takes a skilled and discerning eye to find high-probability pin bar setups that are worth risking your hard-earned money on.

Thus, you will need to learn what a valid pin bar setup looks like, as well as when and how to trade them.

A Pin Bar is a special candle which shows rejection of a level via an obvious spike, or tail, much larger than the entire body.

It’s only a valid pin bar “setup” if it forms in the correct place, otherwise, it’s nothing to take notice of.

In essence, just because a candlestick has the form of a pin bar does mean it’s a trade-worthy pin bar signal.

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How to Trade Pin Bar

1. Trading the pin bar strategy on higher time frame charts like the 2 hours, 4 hour and daily time frame, is a much higher probability way to trade them than trading them on the 5 minute or other low time frame charts.

2. Always trade a pin bar in the opposite direction the spiky tail is pointing. Therefore, a bullish rejection pin bar is one that rejects lower prices and thus tips off to take a long position or buy the market.

3 Modes of entry:

a. Check major EMAs (exponential moving averages) for pin bar setups. The main EMAs that I use are the 20 and 50 period EMAs on the daily chart time frame.

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b. Check for confluence, or at high-probability levels in the market like support and resistance levels.

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Conclusion

Pin bars are awesome indications of a reversal of the trend, but you will want to focus on trading pin bars in trending markets first, as that is the highest-probability way to trade them.

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