In earlier articles, we explored several patterns that help traders spot signals with a high probability of profit.
Today, we shall dissect one of the most popular setups — the Pin Bar. We'll cover what it is, the information it provides to traders, and most importantly, how you can trade it to make money in the currency market.
So, what exactly is a Pin Bar in the Forex market, and how can you spot it on a chart? The Pin Bar is a price action pattern made up of three bars. What it does is signal a potential reversal of the current price movement.
The middle bar is the key — it's the reversal bar, which basically tells us that the previous trend has likely ended, and it's no longer safe to open trades in that direction.
This pattern is called the Pin Bar because the middle bar looks like Pinocchio’s nose — the wooden boy from the fairy tale, whose nose grew longer whenever he lied.
The logic is similar here: the longer the wick of the middle bar, the higher the chance that the price will reverse direction soon after. The highs of the two bars on either side of the Pin Bar are called “Pinocchio’s eyes.”
When the Pin Bar appears on the chart, it signals a sharp change in market sentiment shortly. This typically means that a price movement in the opposite direction of the Pin Bar’s long wick is about to follow.
A reversal Pin Bar is considered formed accurately when it has a small body and a long shadow pointing in the direction of the previous trend.
The body of the Pin Bar should be positioned near one end of the candlestick. Its opening and closing prices must also be close to each other.
The body of the Pin Bar should be completely inside the previous bar, not higher than the previous high in an uptrend, and not lower than the last low in a downtrend.
The reversal Pin Bar must be clearly visible among the surrounding candlesticks. The longer its “nose,” the higher the probability of a price reversal.
The Pin Bar gives a stronger signal when it breaks out significant levels — support, resistance, Fibonacci levels, or the highs and lows of a trend.
Its strength also depends on the timeframe where it forms. The higher the timeframe, the stronger the signal, but keep in mind that the stop loss size will also be much larger.
So, now you know what the Pin Bar pattern is in currency trading. And now, let’s see how it can be used to open trades effectively.
When the Pin Bar forms on the chart and meets all the rules described earlier, you can start looking for entry points. There are several Pin Bar strategies and ways to enter a position.
The safest and most conservative approach is to enter a trade after the Pin Bar closes, and when the price moves at least 10 points beyond it. For a bearish Pin Bar, wait for the price to drop 10 points below its low. For a bullish Pin Bar, wait for it to rise 10 points above its high.
We wait for the price to move at least 10 points beyond the Pin Bar to avoid entering the trade during a false breakout. For conservative trading, the stop loss is placed 10 points above or below the Pin Bar’s "nose", depending on the trade direction.
Next, let’s look at aggressive variations of the Pin Bar strategy and ways to open a position. The first method is to enter the trade immediately after the Pin Bar closes. Here, we don’t wait for a breakout to confirm the reversal pattern — we act right away.
Another aggressive entry method is to open a trade after the price pulls back to a key level identified by the trader. The downside of this approach is that while waiting for the pullback, you risk missing a potentially profitable trade if the price moves sharply without returning to that level.
Now, let’s break down aggressive stop loss placement methods step by step. The first method is to place the stop loss slightly above or below the left “eye” of the Pin Bar.
The potential loss in this case is small, but the chance that the price will accidentally trigger your stop loss is much higher.
The second method is to position the stop loss just beyond a key level or price high or low that the Pin Bar has broken out.
This is less aggressive, as the stop loss is placed behind an important support or resistance level that helps protect the trade.
The third method uses Fibonacci levels applied to the Pin Bar itself. Here, the stop loss is placed beyond the 61.8% level. This approach works best when the Pin Bar is very large.
Now that we’ve covered how to open a position, let’s move on to managing an open trade.
If the Pin Bar is confirmed by strong support or resistance levels, key highs or lows, moving averages, or other signals, the chance of your stop loss being triggered drops to less than 10%.
Once the price travels a significant distance in your favor, it makes sense to lock in part of the profit and move your stop loss to breakeven. This ensures that a winning trade won’t suddenly turn into a losing one.
There are no strict rules about how much of the position to close or at what exact level. It depends on the trader’s mental state, discipline, and experience.
As the price continues moving towards you, you can lock in profits in stages at important levels. The stronger the level, the larger the portion of the position you can close.
When these levels are broken out, you can adjust the stop loss, moving it further along the trend to a safe position.
In this article, you’ve learned what the Pin Bar is — a candlestick pattern that, when it appears at key price levels, often gives reliable signals about where the price is likely to move next.
It’s also easy to spot and interpret, as it clearly stands out on the chart from the candlesticks that came before it, both in shape and position.
By studying Pin Bar patterns thoroughly and applying this knowledge in the Forex market, you can increase your chances of making profitable trades whenever these patterns show up.
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