Forex Pin Bars: Hammers And Shooting Stars
By James Chen on July 3, 2009 | More Posts By James Chen | Author's Website
Pin bars are essentially the equivalent of hammers and shooting stars in the candlestick world. These single-bar price action indicators can be exceptionally effective confirming factors for potential market turns in the forex market. Used in conjunction with other trade decision factors, most notably support and resistance, pin bars can give valuable hints of market directional bias.
The basic concept of a bullish pin bar, or a hammer candle, is a long protruding bar pointing down, with the period open and close very close to each other near the top of the bar. These occur after bearish price runs. The basic concept of a bearish pin bar, or a shooting star candle, is a long protruding bar pointing up, with the period open and close very close to each other near the bottom of the bar. These occur after bullish price runs. Two pin bars are highlighted on the accompanying forex chart. Not only is the shape of pin bars important - the placement is also crucial. In order to be effective, these bars should follow well-defined directional runs. Pin bars, AKA hammers and shooting stars, represent a potential exhaustion in previous momentum, as well as a potential triumph of bulls over bears (for hammers), or bears over bulls (for shooting stars).
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