A pinbar candle is a potential reversal type candlestick pattern. It is a candle type with a small body and large wick more than double the size of the body of the candle.
This type of candle can appear anywhere on a price chart, however when it appears on the chart at certain price areas ( such as support or resistance ) it can give clues to a technical trader of a potential reversal in the market. Because of this reason a pin bar candle can be used for a partial reason to enter a trade in the market as it can signify a low or a high point in the market when it aligns with other factors.
A bullish pinbar closing in a support zone can suggest a potential buy trade or a bearish pin bar closing in a resistance zone can suggest a potential sell trade. Of course, other factors should be considered as well such as risk to reward, trend and any other aligning indicators or aligning fundamental factors that you use with your trading.
The name ‘Pinbar’ comes from the description of what the candle looks like, a pin with a bar on it, however there are other names for these types of candles such as hammer ( bullish pinbar ) and shooting star ( bearish pinbar ).
Above highlighting a bullish pinbar, also referred to as a hammer in some instances or a bullish rejection candle. They are depicted by strong rejection of the lower end of the candle causing a huge wick. To me, a pinbar is defined by there being more than double the wick than the body size on the candle.
Two examples above. Bullish pinbars at lows are bullish signals, however if appearing at a high can be referred to as a hanging man. If wondering why, well that is because it looks like a hanging man from a noose.
A example of a strong bearish pinbar above testing a high, a very bearish signal on a break below this type of candle.
Depicted by sellers pushing the bulls lower on candle forcing a large wick and visually showing us traders rejection of higher prices. This type of candle has also been named shooting star, inverted hammer and bearish rejection candle.
