Pin bar in gold trading
A pin bar is a candle with a long wick and a small body at one end, showing gold was pushed to a level and rejected; hammers and shooting stars are pin bars.
Also called Pinocchio bar, Hammer, Shooting star, Rejection candle
A pin bar is a candlestick with a long wick (at least about two-thirds of the candle’s range) and a small body near the other end. A bullish pin bar, similar to a hammer, has a long lower wick; a bearish pin bar, similar to a shooting star, has a long upper wick. The wick shows price that was tested and rejected within the period.
How it applies to gold trading
Gold’s frequent stop runs leave many long wicks, so pin bars appear often. The useful ones form at levels: a long lower wick through a previous day low or an equal low, closing back above it, is a classic sign of a liquidity sweep and rejection. Entries are usually on a break of the pin bar’s body or on a 50% retrace into the wick, with the stop beyond the wick’s tip.
Pin bars in the middle of nowhere, or on low-liquidity spikes at rollover, carry little information.
Worked example
Example (hypothetical numbers): the previous day low is 3,985. A 1-hour candle opens at 3,995, falls to 3,978, and closes at 3,996. The lower wick is $17 of a $18 range. A trader buys at 3,997 with a stop at 3,975 ($22) and targets the session high at 4,030, 1.5R.
A common mistake
Ignoring where the pin bar formed. Location matters more than shape.
See also: Wick, Liquidity sweep, Doji, Previous day high and low.
Frequently asked questions
What makes a valid pin bar?
A long wick of about two-thirds of the range or more, a small body at the opposite end and, most importantly, formation at a meaningful level.
Is a hammer the same as a pin bar?
A hammer is a bullish pin bar after a decline. A shooting star is a bearish pin bar after a rise.
Where should I enter a pin bar trade?
Common choices are a break of the body, or a limit order at a 50% retracement of the wick, with a stop beyond the wick’s tip.