: Understanding Pin Bars I have troubles with Pin Bars. I read that they could show a trend reversal in the market. Can they be bullish and bearish and how do you tell if it is one (i.e. is there a percentage of body to shadow)?

Vote Up Vote Down   0 Reactions

Login to give Reaction!

*I read that pin bar could show a trend reversal in the market.*

Alexej, you asked five different questions in your post... Next time, separate please.

Can they be bullish and bearish ? Yes, both depending on the candles before.

How do you tell the difference ? Difficult to say. It depends. You cannot use this formation alone, you have to consider the group of candles before your so called Pin Bar.

Is there a percentage of body to shadow? No, candle stick charting is mostly based on visual interpretation, but sometimes 50% is a good percentage to look for.

If the body is so small that it could be seen as a Doji candle, what would be the difference ? None. Again candle stick analysis is visual and based on experience. Sometimes it's bullish, sometimes bearish. The correct interpretation comes with experience.

Wouldn't it be called Grave Stone or Dragon Fly Doji then? These so called "pin bars" are in fact hammer and hanging man candlesticks. It's a question of words. The author you read is coining words.

Does the direction of the longer shadow make the price direction or does the colour of the Pin Bar play a role, too? They go together, the shadow shows rejection of a certain price level. It indicates a move opposite to the direction of the rejection. The move is in the direction of the body not the shadow.

Your sources: I suspect your reading come from a website advertising "Forex trading made easy" or the like. There are a lot of those around. Many are investor's traps in my opinion.

I would suggest that you refer to the classic texts on candlestick charting instead of refering to website dedicated to selling their Ebooks, special courses and private coaching for Forex trading. Yes, candlestick charting is the best way to time the markets, but you learn by experience. Join this candlestick trading forum to learn. I am still learning every day. Happy trading to you.