A picture paints a thousands words, and that's how we should view our charts where each candle describes what's currently happening with price as well as it's history. Candles are always born neutral, after birth they can grow to become
either bearish or bullish. Now if there's a candle that can describe exactly who won the battle between bears and bulls it our famous pin bar. In the next few examples I will discuss charts with EMA, Support and resistance, Trend lines & Swing High & Lows. Please feel free to seek examples using other methods and indicators with pin bars.
Horizontal Support & Resistance
In the chart above we can see that there is a strong horizontal level / zone, where on numerous occasions price action found either support or resistance. In the later part of the chart a strong breakout of this level to the upside occurred and we can see that horizontal level previously resistance now has become support. Now that price has broken out we can wait for a pullback back to this horizontal level for a price action signal to enter the market and follow the momentum to the upside.
EMA
This chart we can see that price was ranging for a while bouncing off strong support. A pin bar signal formed where we can see price moved aggressively to the upside. Please note when taking a reversal candle or counter trend trade make sure that the candle closes in the direction of the trade, so for this example the first pin bar would not be traded as it didn't close as a bullish pin bar and it wasn't the best looking pin bar as it looked like more of a indecision candle. The next 2 highlighted pin bars are tradeable where we can see price rejecting EMA off short term support.
Trend Lines
In this chart we can see a strong uptrend is in place where swing lows are being formed as price moves up. On the chart I have highlighted a valid pin bar allowing us to enter the market.
Conclusion
The Pin Bar Candlestick reversal pattern is one that not only happens to occur quite frequently, it is also one of the most powerful reversal patterns available to a forex trader. This pattern can be traded on any time frame and is best traded from major price action levels like previous support and resistance or pivot points and the like. The better the Pin Bar formation the higher the probability and the better the location the higher the probability. Only take the best Pin Bars in the best locations and the rewards will speak for themselves.
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