Pin bar formation on forex consists of three consecutive candles that are easily trade able as price reversal formations. This specific formation can be found and used on any time frame and currency pair. It can also be used as an add on for various forex strategies, improving the reliability of almost any signal.
Bullish pin bar candles: Small body of candle. Small or none upper wick. Long lower wick.
Bearish candle followed by pin bar candle. This signalise that bears encountered massive support on the way down. This is confirmed by next candle which is bullish, surpassing – closing above open of first bearish candle of formation.
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Stop loss: Under low of pin bar candle.
Bearish pin bar candles: Small body of candle. Small or none upper wick. Long lower wick.
Bullish candle followed by pin bar candle. This signalise that bulls encountered massive resistance on the way up. This is confirmed by next candle which is bearish, surpassing – closing below open of first bullish candle of formation.
Stop loss: Above high of pin bar candle.
Take profit: Same as distance between position entry and stop loss. R:R – 1:1. In direction of strong can be doubled.
This strategy works best in confluence with supports and resistance levels. It is also important to consider current trend.