Pin bar
Definition
A pin bar is a candle with a small body and one long wick no shorter than two thirds of the whole candle: price travelled sharply in one direction and came back by the close. At a support or resistance level it is a sign of rejection and a possible reversal. In binary options a pin bar is traded from the open of the next candle in the direction opposite to the wick, with an expiration of one to three candles.
Signs of a pin bar
The pin bar is named after Pinocchio's nose: the long wick "stretches out" toward where the market tried to go before it was thrown back. Three conditions, all mandatory:
- A long wick no shorter than two thirds of the candle from high to low. That is the "nose".
- A small body at the opposite end of the candle; the body's colour is secondary.
- A short or absent second wick: if the wicks are long on both sides, that is indecision, not rejection.
The fourth condition concerns not the candle but the place: a pin bar matters only at a support or resistance level, the edge of a range or the last high or low. The same candle in the middle of a move is just a wick without meaning.
Bullish and bearish pin bars
| Bullish pin bar | Bearish pin bar | |
|---|---|---|
| Long wick | lower | upper |
| Body | in the upper third of the candle | in the lower third of the candle |
| Where to look | at support, the lower edge of a range, after a pullback down in an uptrend | at resistance, the upper edge, after a correction up in a downtrend |
| What happened | sellers pushed price down, buyers bought everything back by the close | buyers lifted price, sellers brought it back by the close |
| Trade direction | up | down |
The strongest pin bars are those whose wick goes beyond the level while the close stays inside: that is both a false breakout and a collection of stops beyond the level. A pin bar that did not reach the level or stopped short of it is weaker.
How to trade a pin bar in binary options
A trade in binary options cannot be closed early; it lives until expiration, so there is no point entering inside a candle that has not closed yet: before the close a pin bar can still turn into an ordinary candle with a body. The order of work:
- Wait for the candle to close and make sure the wick really takes two thirds and the body sits at the opposite end.
- Check the place: a level, a range edge, the last extreme. Without a level there is no signal.
- Check against the higher-timeframe trend: a pin bar with the trend of the higher chart works out noticeably more often than one against it.
- Enter at the open of the next candle in the direction opposite to the wick.
- Expiration of one to three candles of the working timeframe. The payout does not depend on the expiration time, so choose it by the speed of the pullback, not by the percentage.
Pin bars in the terminal
In BinoView Supercharts candlestick patterns are enabled with a single indicator, and it marks pin bars alongside the hammer, the shooting star and the engulfing. How to set up the display of patterns and filter false signals is covered in the candlestick patterns guide, and reading the candles themselves, bodies and wicks, from scratch in the full guide to Japanese candles. Level bots read a wick touching a zone as a bounce, so their signals often coincide with pin bars at a level.
How it differs from a hammer, a hanging man and an engulfing
The hammer, the hanging man and the shooting star are not different figures but pin bars with the context specified. A hammer is a bullish pin bar with a long lower wick after a fall. A hanging man is the same shape after a rise, a warning of a reversal down that needs confirmation from the next candle. A shooting star is a bearish pin bar with a long upper wick after a rise. An engulfing is built differently: it is two candles, where the body of the second fully covers the body of the first, and the signal comes not from a wick but from a change of control between two periods. A pin bar followed by an engulfing in the same direction is one of the most reliable combinations at a level.
Frequently asked questions
How long should a pin bar's wick be?
No shorter than two thirds of the whole candle from high to low, with the body in the opposite third and the second wick short or absent. A candle with a wick of half its length is just a candle with a long wick: it can be counted as rejection, but not as a signal in its own right.
Which way do I enter on a pin bar?
In the direction opposite to the long wick, at the open of the next candle. A pin bar with a long lower wick at support is a trade up; one with a long upper wick at resistance is a trade down. Expiration of one to three candles of the working timeframe. A pin bar in the middle of a move, away from any level, is not traded.
Are a pin bar and a hammer the same thing?
A hammer is a special case of a pin bar: a long lower wick after a fall, at support. Pin bar is the general name for any candle with one long wick, with no direction attached. The hanging man and the shooting star are the same pin bars, named by the context in which they appeared.