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Pin Bar Reversals Pattern Strategy

  • Pin bars are the most effective ways to trade candlesticks as these formations tend to create high probability price action trading setups.
  • A pin bar forms when the price goes up or down during a single time period, but the closing price remains within the previous bar.
  • Here, we have identified two pin bars, a bullish one and a bearish one.
  • The way you trade pin bars is you wait for the asset’s price to break above or below the high or low, respectively. At that point, you enter the market.
  • Pinbar setups are triggered once the price of the next candlestick breaks above the body of the pinbar. Once your order is triggered, you can look for next support and resistance levels to find your primary profit target. If you are a short-term trader, you can simply target a reward to risk ratio of 3:1 or any other ratio that suits you.
  • However, when you find pin bars forming at the extreme high or low of a sustained trend, it would signal a complete reversal of the prevailing trend. Hence, trailing your open position based on ATR or X-bar stop losses could be a good strategy as it would maximize your profit in the long-run.

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