Pin bar is a candlestick setup that clues price action traders into potential reversal in the market. So if a trader sees a long wick sticking out below price action; they can look to go long. If a
trader sees a long wick sticking out above price action, they may want to look to go short.
In fact, pin bar is not that simple. There are actually both genuine and fake pin bars in a chart.
The difference between a Pin Bar and a Fake Pin Bar is determined by recent price action. That’s why if a trader focuses on the pin bar only, it is highly likely that he will fail.
If the long wick sticks out from recent prices, that is a Pin Bar. This is the ‘lie’ that the market may be telling us: That a movement to a previously untested level has brought a new group of buyers (or sellers in the case of a bearish Pin Bar).
If the long wick does not stick out from previous price action; they are not a genuine Pin Bar, but rather ‘Fake Pin Bars.’
Identifying a fake pin bare can help you avoid unnecessary actions and make a better deal. However, you are advised to consult more other data and analysis.
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