If it were me - I wouldn't class this as a pinbar. To me a pinbar needs to have a small body, so the open/close need to the very near to each other. The other thing I look for is that the open/close of the pinbar are totally contained within the high/low of the previous candle (to the left). On this chart the candle you are looking at does not have these.
This is an EXCELLENT answer. I agree 100%. Thanks Jillyb.
However, you are correct in saying that it is bouncing of a level of support/resistance and the long tail suggests that price is rejecting going lower, however I would be looking for the following candle to confirm this reversal move, which it does here with a bullish engulfing candle next. For me, I always look for price to confirm a reversal by closing above the next fib level - so, for instance, if price goes down to the 61.8% fib and is rejected at this level, I look for a positive close above the 50% fib before I would enter.
I don't play these quite the same way as Jillyb. If I see a pin bar that looks good, I enter AS it breaks the high of the pin. Jillyb is playing these in the way she is comfortable with which is to say she looks for a more significant confirmation of the reversal.
An agressive trader can play a pin as soon as it has closed and before waiting for a break of the high/low of the bar. I don't see the point of this in most circumstances since a good pin closes at or near to its high/lows anyway. However, in markets that are not quoted 24hr this can work and get you in before a gap up/down (with the inherent risk that the market could also open AGAINST you too)
There are also other ways to play them depending on how conservative you are. Some traders wait for a retracement of the pin so that the stop is much smaller.
The problem with this technique is the pin is not validated UNTIL the high/low of the bar (depending on which way it points) is broken so you are entering before the probability is there that it will work. Also, many pins will not retrace at all meaning you will miss out on a good many moves.
The advantage is that you MINIMISE your risk and MAXIMISE your potential return if it works. I don't do this but IF YOU WANT ME TOO, I will show you HOW it can be done.
One final way is to wait for the right eye to form. Look at the example I posted above. The left and right eye are almost matching. If you see this it can be viewed as ADDED confirmation that the pin is going to be a good one. Again, you don't see this every time and if you wait for it, you may end up missing a move.
There are different ways to play these, playing them on a BREAK is simply how I do it.
Finally - I apologise for so many words and not many images. I can't get images up very easily at work as people can see my screen...words are far less obvious than editing charts
🙂
