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You can’t really trade price action properly without understanding the pin bar reversal.

It’s one of the most widely used candlestick setups across both forex and stock trading—and for good reason.

At first glance, it looks simple: a candle with a long wick and a small body. Easy to spot, easy to understand, and often appearing right before a reversal.

That simplicity is exactly why so many traders are drawn to it.

But there’s a lot more going on underneath the surface than most people realise.

The pin bar isn’t just a “rejection candle,” despite what you’ll often hear from trading gurus. That explanation gets repeated so often it’s almost become gospel—but it misses the real story of what’s happening in the market.

Today, we’re going to break it down properly.

You’ll learn:

1. 1) What a pin bar actually represents in terms of order flow and market pressure
2. 2) Why the long wick forms (and what it really tells you about momentum shifting)
3. 3) How to trade pin bars in a way that avoids common retail mistakes
4. 4) And why the “rejection” narrative is an oversimplification that can lead traders astray

We’ll also look at how context completely changes the meaning of a pin bar—because on its own, it’s not a strategy. It’s just a signal that needs to be interpreted correctly within structure.

Once you understand what’s really going on behind the candle, you’ll stop seeing pin bars as magic reversal signals—and start using them as part of a much more complete price action framework.

Let’s get into it.

What The Hell Is A Pin Bar?

Tell Me…

Have you ever looked at a candlestick with a huge wick?

A wick so large that it immediately catches your attention and stands out from every candle around it?

If you have, then chances are…

You’ve just seen a pin bar.

Recognised by its long wick that extends dramatically away from the surrounding price action, the pin bar—also known as a hammer or shooting star depending on its location—is one of the most well-known reversal patterns in technical analysis.

The idea behind the pattern is simple:

Price moves aggressively in one direction, but then gets pushed back before the candle closes.

This creates a long wick that shows a rejection of prices at a particular level and can signal that the market may be preparing to reverse.

Pin bars appear across every currency pair, market, and timeframe, making them one of the most commonly observed candlestick patterns traders use.

The name “pin bar” is often said to come from legendary technical analyst Martin Pring, who supposedly named it after the story of Pinocchio because the wick represents the candle “lying” about where price is heading.

However, that explanation is actually a misconception—which I’ll explain later.

There are two main types of pin bars:

Bullish Pin Bar

Bullish Pin Bar

A bullish pin bar suggests price may be preparing to move higher.

It has a long wick below the body, showing that sellers pushed price lower but buyers stepped in and forced price back up before the candle closed.

The wick acts like a “tail” pointing downward.

Bearish Pin Bar

A bearish pin bar suggests price may be preparing to move lower.

It has a long wick above the body, showing that buyers pushed price higher but sellers regained control and pushed price back down.

The wick points upward.

And the Bearish Pin Bar, which indicates the price is likely about to fall.

(These always have their wick ABOVE the body).

A Candle Is Only A Pin Bar If It Has These Three Features

Although all pin bars share the same basic structure—a long wick and a small body—they rarely look identical on a chart.

Some are obvious.

Others are much harder to identify.

So how do you know whether a candlestick is a genuine pin bar?

There are three key features to look for:

1. A Long Wick That Stands Out

The wick should clearly extend away from the surrounding candles.

Ideally, it should be around 2-3 times the size of the entire candlestick range.

This long wick is the defining feature of the pattern and is what separates a pin bar from a normal candle.

The wick can appear:

• Below the body → bullish pin bar.
• Above the body → bearish pin bar.

The wick is also commonly referred to as the candle’s tail or shadow.

2. A Small Body

The opening and closing prices should be relatively close together, creating a small candle body.

This shows that although price moved significantly during the candle, it ultimately closed near where it opened.

The smaller the body compared to the wick, the more visually pronounced the pin bar becomes.

3. The Body Must Sit Near One End Of The Candle

A valid pin bar should have its body positioned close to one end of the candle.

For a bullish pin bar:

• The body should be near the top.
• The wick should extend downward.

For a bearish pin bar:

• The body should be near the bottom.
• The wick should extend upward.

This positioning shows that price attempted to move in one direction but was rejected before the candle closed.

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One final point:

Don’t get too caught up trying to make every pin bar fit a perfect textbook definition.

Markets are not mechanical, and candles rarely look identical.

In most cases, if a candlestick has a clearly visible wick that dramatically protrudes from the surrounding price action and a small body positioned near one end, it’s safe to treat it as a pin bar.

The key is not whether the candle is a perfect example.

The key is understanding why it formed and what the price action behind it is telling you.

What Most Forex ‘Gurus’ Get Wrong About Pin Bars

If you read the many guides and blog posts people have made about pin bars on the web, I can guarantee at some point  you’ll hear something along the lines of…

“Pin bars show a price rejection” or,

“A pin bar forms because traders have rejected higher/lower prices”.

To those not ‘in the know’, these statments make a lot of sense. I mean, the long wick clearly indicates a the market quickly retraced after reaching a certain price – how else would price reverse and create the pin? For a long time, I believed those statements above were what caused pin bars to form.

But I can tell you right now, I was DEAD WRONG!

Write this down somewhere…

A Pin Bar DOES NOT show that market has rejected higher/lower prices or a key level.

In reality, what it indicates depends on two factors:

1. – WHERE the pin bar has formed on the chart, and…

2. – WHO caused the pin to form.

Most traders forget (or don’t know perhaps) that forex doesn’t function as a one massive hive mind of people collectively making decisions on when and where price moves.

Multiple groups of people operate in the market for different reasons.

Banks and hedge funds buy and sell mainly to make money from retail traders (i.e, us). Companies also buy and sell to meet the needs of their business. Retail traders aim to make money from predicting price movements, usually by watching news or using technical analysis.

These groups can all cause pin bars to form for reasons that have NOTHING to do with a rejection or reversal.

Take Toyota for example…

If Toyota needs to buy parts from Europe, it must sell Yen for Euros.

When they sell, the resulting decline could cause a bearish pin bar to form.

Does that pin have a high chance of initating a reversal?

HELL NO!!

Now if you don’t know they’ve sold (which you won’t), you’re not going to know the pin bar has a low probability of causing the price to reverse; you’ll just treat it like any other pin, possibly resulting in a loss.

My Point: Don’t assume all pin bars signal a reversal or rejection.

Some of them do, yes, but the vast majority don’t.

Always think about how and why a pin has appeared before taking any signal. Checking the wick length can give you some idea – pins with HUGE wicks usually indicate a reversal – but due dilligence is still nessacary.

Keep this in mind the next time you see a pin form.

The 3 Best Pin Bar Trading Strategies You Can Use Right Now

Few candlestick patterns are as versatile as the pin bar.

While many traders think of it simply as a reversal signal, the reality is that pin bars can be used in a wide variety of ways, depending on the market context and your trading approach.

That’s one of the reasons they’ve remained so popular for decades.

A single pin bar can help you:

• Spot potential market reversals.
• Confirm trend continuation setups.
• Time entries around key support and resistance levels.
• Signal when to take profits or tighten risk.
• Add confirmation to strategies using trend lines, Fibonacci retracements, supply and demand zones, and other technical tools.

In other words, the pin bar isn’t a strategy in itself—it’s a tool that can be adapted to almost any trading style.

There are countless ways to trade pin bars, and covering every variation would take an entire book.

Instead, I’ve focused on the three strategies that I believe offer the greatest potential. These are the approaches I’ve found to be the most reliable over the years, and they’re simple enough for any trader to start using immediately.

Let’s dive into the first strategy.

Pin Bars At Support And Resistance Levels

The most popular way to trade pin bars—and arguably one of the most effective methods, especially in the forex market—is by combining them with significant support and resistance levels.

Individually, neither pin bars nor support and resistance levels are particularly powerful.

A pin bar can fail to produce a reversal.

A support or resistance level can break despite looking strong.

But when the two are combined, they create a much stronger trading opportunity.

A pin bar forming at a meaningful support or resistance level shows that price has reached an area where buyers or sellers are willing to step in and defend their positions. This additional confluence increases the probability that the market may reverse from that area.

Think of it like this:

A support or resistance level tells you where a reversal could happen.

The pin bar tells you when traders are stepping in.

Together, they create a more complete trading signal.

The process is simple.

First, identify important support and resistance levels on your chart. Focus on areas where price has previously reacted strongly rather than minor levels that have little significance.

Then, wait for price to return to one of those areas.

When price reaches a key level, pay close attention to the candles forming around it.

At support levels, look for bullish pin bars that suggest buyers are stepping in and rejecting lower prices.

At resistance levels, look for bearish pin bars that suggest sellers are entering and rejecting higher prices.

If a valid pin bar forms at the level, you can then enter a trade using one of the two entry methods explained later in this guide.

Simple.

• Wait for the level.

• Wait for the signal.

• Then execute the trade.

The power of this strategy comes from combining location with confirmation—rather than relying on a pin bar alone.

At Fibonacci Retracements

You can also trade pin bars at fibonacci retracements.

You won’t get as many trades as trading them at S & R levels – because retracements don’t occur that often – but the trades you do get will have a higher probability of being successful, which still makes it a worthwhile strategy.

Trading the pins is simply a matter of waiting for the price to hit a retracement level and then seeing if a bullish or bearish pin bar forms.

In the image you can see a sharp decline caused the price breakthrough several retracement levels before reversing at the 61.80% level, resulting in a bullish pin bar forming. After the pin appeared the price reversed entirely, rising almost 70 pips in this case.

Note: Only trade bullish pin bars that form at retracements drawn on upswings and bearish pin that form on retracement drawn on a down-swings.

On Their Own

Pin bars are best traded at support & resistance Levels or fibonacci retracements.

But you can also trade them on their own with no other confirming factors.

The thing you must remember about trading pins on their own is to always think about WHY they’ve formed.

Like I said earlier, pin bars don’t form for the same reasons.

Most form as a result of people buying and selling for reasons that have nothing to do with causing reversals, like taking profits for instance.

So before you take a pin bar trade, at least when trading them on their own, look at WHERE the pin has formed and then think about WHY it might have formed there.

Ask yourself: “Has this pin formed because of traders taking profits, or do traders actually want the price to reverse from here?“.

How To Trade The Pin Bar Once It Has Appeared

Whichever way you decide to trade pin bars, you have two different methods available to enter a trade.

Method 1: Market Order Entry

This method is where you enter using a “Market Order”, or “Instant Order” as some brokers call it.

To enter, wait for a pin bar to close (by seeing the next candle open) and then buy or sell using a market order.

The market order entry is good for guaranteeing you get into a pin bar trade, but it does require a bigger stop loss than the limit order entry, so you do have to risk a little more money using it.

Method 2: Limit Order Entry

The other method is to enter using a “Limit order” – an order set at a price the market hasn’t reached.

The price often (but not always) retraces to the halfway point of a pin bar before it reverses.

By placing an order at the halfway price, you can enter at a lower price, decreasing the risk and increasing the reward.

To enter using a limit order, find the halfway point of the pin (by placing the fib tool on the high and low and looking for the 50% level) and then place the order at the 50% level price.

Example Of Pin Bars In The Market

Pin bars form in all conditions; during up-trends, downtrends, consolidations etc… which is just another reason I highly recommend you start looking for them.

To get you up to speed with what they look like during these conditions, and give you a few tips for trading them, here are some examples of pin bars in the market.

Here’s what I’d call the “classic” pin bar setup:

The price rises up to a resistance level, goes beyond it slightly, then falls again, creating a long wick and causing a bearish pin bar to form.

Take note of how the wick sticks out, even against the surrounding candles. These are the type of pin you want to look for; small square body at one end of the candle, long wick below.

This image shows a couple of pins that formed at support levels against the trend – a downtrend in this case.

Pins that form against the current trend, whether on their own, at S & R levels or fib retracements, don’t tend to work that well. Sometimes they can cause a small reversal, but most of the time, the price will go straight through them – usually because they’ve been created by profit taking.

If you do want to trade a pin against the trend, make sure it has an especially long wick and confirmation with multiple technical levels e.g it’s formed at a strong level of support and the 50% retracement level.

Pin bars also form frequently during consolidations.

Most form when the price is travelling to one side of the consolidation to the other, but the best ones (the ones you want to be trading) appear at the sides or edges of the consolidation, and usually signal a move back to the other side is about to take place.

Pin bars have a much better chance of being successful when they form at a point of confluence.

Notice how the pin above has formed at a support level which is in line with the 38.5% retracement level?

That’s called a point of confluence, because a pin, support level and fib retracement have all met at the same point, which increases the probability of a reversal taking place.

The 3 Most Common Mistakes People Make Trading Pin Bars

Time and time again I see people make the same mistakes with pin bars.

Some of the mistakes everyone knows and is guilty of, like trading against the trend, but others aren’t as obvious, and this mainly due to the misleading information books and forex gurus have given people about what pin bar is and what causes them to form.

To help you avoid these mistakes, here’s the 3 most common…

Trading Pin Bars That Form Against The Current Trend

Trading against the trend is never a good idea, yet it’s a mistake pin bar traders make all the time.

Most of the pins that form against the trend the trend don’t end up being successful for a very simple reason…

Profit taking.

9 times out of 10 the pins that form against the current trend appear because of traders taking profits, NOT buying/selling to make the price reverse.

These pins, of course, have a low probability of causing a reversal, because the traders still want the price to continue moving in the direction of the trend.

They do work on occasion, but most of the time they don’t.

So make sure you don’t trade them.

Taking Pins That Appear During Low Volume Times

Loads of traders make this mistake, but its one I think most traders aren’t even aware of.

A pin bar that forms during a low volume time, like when a pair is out of its normal trading hours, DOES NOT have a high probability of causing a reversal.

The reason why is simple:

For a pin bar to cause a reversal, traders with big money (such as those that work in banks and hedge funds) must be active in the market.

If these traders aren’t active, which they aren’t outside of currencies normal trading hours, any pin bar that forms is unlikely to cause the price to reverse.

So the next time you see a pin bar form at midnight on Eur/Usd, DON’T trade it, because it hasn’t been created by big money traders buying and selling, therefore it has a LOW probability of causing a reversal to take place.

Note: Pins that form during low volume times are usually much smaller than other pins.

Trading Pin Bars That Appear After Sharp Rises And Declines

Ever seen a pin form after a sharp rise or decline, entered a trade to try to catch the reversal, only to then see the price continue to rise or fall?

…Annoying isn’t it.

These pins usually meet all the right criteria, but there’s a simple reason they rarely work:

They’re created by profit-taking.

Just like the pins that form counter to the current trend, the pin bars that form after sharp rises and declines usually appear because of traders taking profits off their trades, not as a result of buying or selling to make the price reverse.

These pins obviously don’t have a high chance of causing a reversal, a big one at least. But because of how they look people often trade them assuming they’re good signals.

So, don’t trade the pins that form immediately after sharp rises or declines take place.

Wait for more signs of a reversal such as retracements and multiple highs (or lows if it’s a decline) forming and then if another pin appears, take a trade.

The Bottom Line

All in all, the pin bar is one of the most effective price action strategies you can use in the forex market. It’s easy to spot and trade, making it an effective strategy for beginners and professionals alike.