Anatomy of a Pinbar
The Forex Pinochio (or Pinbar for short) is actually made of three bars. The nose of Pinochio is the middle bar, and it is telling you that prices are going up, except Pinochio is lying, so prices are really going down. The bar to the left of the nose is the left eye, to the right of the nose is the right eye.
A few points to note when identifying a Pinbar.
- The body of the nose should be atleast 66% above the high of the left eye.
- It should have a high that is higher than any other high of the immediate trend. See below image for example.
- It is very important that the open/close of the nose is contained within the range of the left eye.
- The more layers of resistence the nose penatrates, the stronger and more valuable the Pinbar is. Fibonacci retracements, Pivot Points and Moving Average lines are used in conjunction with the Pinbar chart pattern. See below image for example.
- The Pinbar is valid with any time frame, yet the longer the time frame, the more reliable the Pinbar is.
- This pattern identified on a bar chart or japanese candlestick chart.
The figure below demonstrates that a Pinbar should be the highest point of the trend, and that the nose should penatrate through atleast one level of resistence. In this case it is the 76% fibonacci retracement.
The Foreign Exchange market offers many opportunities to play the Pinbar. So now that you know how to identify one, read on to learn how to play the Pinbar. Learn to play the Pinbar