Not All Pin Bars Are Created EqualA Two-Step Filter to Find the Ones That Actually Matter
We’ve all seen them. Long wicks, tight bodies, price rejecting a level. The classic pin bar. Textbook stuff, right?
But here’s the problem. Pin bars show up all over the chart. Some lead to clean reversals. Most do absolutely nothing. The trick isn’t spotting them. It’s knowing which ones to trust.
This is where a simple two-step filter can help. By asking two key questions, you immediately improve the quality of your trades and cut down on the false positives.
Step One: Where Did It Happen?
Before you look at shape or size, ask yourself one thing.
Did this pin bar form at a meaningful level?
Context is everything. A pin bar that forms into thin air, mid-range or in the middle of chop might look good, but it’s rarely reliable. What you’re looking for is reaction from structure. That could mean:
• A clean horizontal support or resistance level
• A prior swing high or low
• A daily VWAP or anchored VWAP from a key event
• The edge of a range or value area
• A trendline tested multiple times
In short, the level gives the pin bar a reason to exist. It becomes a reaction, not a random candle.
Mark the level before the candle forms. This stops you from retrofitting significance where there isn’t any.
Example:
Here we can see how the volume weighted average price (VWAP) can add meaningful context to a pin-bar setup. In this case, USD/CAD retraced against the prevailing downtrend and tested the VWAP anchored to the recent swing highs. At that point, price formed a clear pin-bar reversal, signalling rejection and potential continuation with the broader trend.
USD/CAD Daily Candle Chart
Past performance is not a reliable indicator of future results
Step Two: What’s Happening Under the Hood?
Once you’ve got a pin bar at a meaningful level, it’s time to look deeper. One of the best ways to do that is by dropping down to a lower timeframe, like the 5-minute chart, and replaying the session that created the candle.
Why?
Because daily candles can hide a lot. A clean pin bar might look like a strong rejection, but on the intraday chart, it might just be a low-volume fakeout or one impulsive move during quiet hours. On the other hand, a pin bar backed by real market structure is far more likely to hold.
Here’s what to look for on the lower timeframe:
• Was there a liquidity grab or stop run into the level?
• Did price pause, base or reverse with intent?
• Were there multiple attempts to push beyond the level that failed?
• Did volume spike during the rejection?
When a pin bar reflects a genuine intraday battle, not just a random wick, it often tells you more about the intentions of real participants.
Example:
In this example, GBP/USD forms a bearish pin-bar at a key area of swing resistance on the daily chart. Dropping down to the 5-minute timeframe helps reveal what actually happened inside that candle.
On this lower timeframe we can see that price initially pushed above resistance but failed to hold, triggering a steady wave of intraday selling pressure. This move was followed by a mild pullback during the latter half of the US session and into the New York close, reinforcing the idea of rejection and offering insight into the mechanics behind the pin-bar.
GBP/USD Daily Candle Chart
Past performance is not a reliable indicator of future results
GBP/USD 5min Candle Chart: How the Daily Pin-bar Formed
Past performance is not a reliable indicator of future results
Bonus Filter: What’s the Trend Context?
You could also add a third layer if you want to refine even further. Is the pin bar counter-trend, or is it a pullback within trend?
Counter-trend pin bars at key levels can work, but they’re lower probability and often take more time to play out. Pin bars that form as part of a pullback to structure in the direction of the prevailing trend tend to move more cleanly.
This is where using something like a 20 EMA or anchored VWAP can help frame the setup.
Putting It All Together
Next time you see a pin bar, pause. Don’t rush in. Ask yourself:
• Did this happen at a level that matters?
• Does the intraday story back up the candle?
If the answer is yes to both, now you’ve got something worth trading. Not just another wick in the wind.
Pin bars can be strong signals, but only when they reflect real intent. This two-step filter helps you cut through the clutter and focus on the ones that do.
Disclaimer: This is for information and learning purposes only. The information provided does not constitute investment advice nor take into account the individual financial circumstances or objectives of any investor. Any information that may be provided relating to past performance is not a reliable indicator of future results or performance. Social media channels are not relevant for UK residents.
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