Pin Bar Candlestick – A Powerful Price Pattern You Should Know
Candlesticks patterns play an important role, especially when it comes to day trading as well as investing. What’s interesting, a single candlestick pattern has the ability to provide more information about whether the bullish trend will persist or whether a reversal is about to take place.
There is no lack of candlestick patterns. For example, bullish engulfing, hammers, and doji. Let’s focus on pin par candlestick.
Do you know what is a pin bar candlestick? Let’s find out!
It is a single-bar candlestick. Interestingly, it consists of a small body and a long upper or lower shadow.
Interesting details about pin bar candlestick
Do you know how to identify a pin bar pattern?
One option to identify a pin bar pattern is first to know what a pin bar pattern looks like. Interestingly, you can utilize TradingView’s indicator tab. As a reminder, it is important to pick all candlestick patterns.
Nevertheless, it is noteworthy that TradingView’s indicator tab isn’t accurate. So, the above-mentioned TradingView’s indicator tab should be used as a starting period for this analysis.
Another option is to utilize visual analysis in order to locate the pin bar pattern. What you need to do is to look at the chart. Hopefully, it isn’t hard to identify a pin bar pattern. As you do this, there is a chance that you will identify other chart patterns in the chart as well.
You should conduct a multi-timeframe analysis in order to gather more information.
Interestingly, a situation known as a double pin bar can occur. Double pan?
A double pan happens when the initial pin bar pattern is followed by another pin bar.
What traders need to know
Now, let’s focus on pin bar trading strategies.
Have you heard about the contrarian approach?
It is a popular pin bar trading strategy. Notably, this strategy refers to a situation where a trader presumes that the original trend will persist. Hence, they go in the opposite direction.
As we have already discussed the contrarian approach, we can move to another strategy; reversal.
In most cases, the pin bar candlestick is a reversal sign. So, when the pin bar candlestick forms, the pin bar candlestick typically sends a signal that the asset will move in the other direction.
You don’t know what to do? You can open a trade in the opposite direction. The next step is to create a stop-loss.
It is also possible to combine various patterns. Another approach to utilizing the pin bar pattern is to combine the pin bar pattern with other chart patterns and technical indicators.
The pin bar pattern is a useful reversal pattern. The above-mentioned pattern can be used by investors and traders.
Useful information for pin bar traders
As you can see, the pin bar candlestick plays an important role. However, we shouldn’t forget about challenges as well.
Pin bar trading is regarded as one of the most reliable methods when trying to determine the price of action of the specific market you are trading in.
Without exaggeration, pin bar trading is a powerful tool in any trader’s arsenal. As a reminder, they are very easy to spot. You only need to pay attention to a two-candlestick formation.
However, the situation regarding pin bar trading is more complicated than it might appear at first glance. You need to learn how to use the above-mentioned method. We need to mention that it takes time and effort to master the method.
Quite often, traders will begin trading on what they think are pin bars. In reality, they don’t satisfy the minimum criteria. As a result, some traders don’t reap the rewards traders intended to. To spot a true pin bar, the price must open and close within the previous candle.
Furthermore, traders use the incorrect areas of the chart. Moreover, many traders use the wrong prices. Also, some traders believe that it is possible to utilize the pin bar reversal strategy as a continuation signal.
To sum up, it is desirable to pay attention to various details in order to reduce risk factors.
