Pinocchio Bar (Pin Bar) Formation & System

[vikrit]

In this thread will post details of pin bar formation (abbreviation Pinocchio bar formation). The term coined by Martin Pring.

The source of details is google, these are my notes on topics as I studied around, I am just a student of TA, not a master, so if anybody find anything wrong or incorrect please correct me, if have any advice please give.

This is a bar chart formation but didnt found anything specific to use bar chart. So after initial details will post with candlestick alone. I experienced this works better on higher time frame. Higher the time frame, certainty of move is more.

I will try to post my trades or decisions by this if possible. Also if anybody used it, using it and trading then please post your experiences, trades etc if possible.


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[vikrit]

Pinocchio Bar formation name is based on the old European story about the wooden boy, Pinocchio, whose nose grew longer every time he told a lie. The bigger the lie the bigger the nose!

So, in trading Pinocchio bar (which is abbreviated to pin bar) means a bar which poking his long nose outwards and is telling you a lie (an untruth) about where the price is going. For having a pin bar formation on chart you need to see three things 2 eyes and 1 nose.


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[vikrit]

From now onwards will use term pin bar. See following chart, this is a completed pin bar formation (in bar chart and candlestick chart)-

The bar named as a ‘nose’ is pin bar, and high of the side bars’ high are ‘eyes’ of pin bar.
We always trade in the opposite direction of nose pointing. Like here we will go for short.

Valid pin bar must-

1. have open and close within first eye’s high if pointing up or within first eye’s low if pointing down.
2. stick out from surrounding bars, it can’t be a inside bar.


Good pin bar formation will (have above 2 points and )–

3. have a long nose
4. stick out at least 50% or more of pin bar from surrounding eyes
5. form at high (for pointing up nose) or low(for pointing down nose) for a term (like weekly high/day’s low/swing high)
6. have open and close of pin bar is at the end of one end.


Points to note to identify pin bar formation –
- Pin bar formation more effective when nearby a strong S&R or any levels or TL’s etc.
- Pin bar is THREE bars/candles formation, for trading decision at least initial two require,
- NEVER EVER consider or trade it as a single bar system (as per my knowledge).
- Pin bar (valid) is not always a Doji (candlestick), but when it is, then more effective (Point 6)


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[vikrit]

Following image showing conservative entry and stop loss -

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[vikrit]

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Points to be note while trading with pin-bar formation-

- Few good pin bars will hit the initial conservative stops, without giving the chance to take some profits
(this may happen some times, dont have any figure but very few times),

- If you are in profit then do not let the market take it back, book some partial profit and use trailing stops.
Mind it but it is important to close out part of the position early and learn to shift the stop loss to the
breakeven point quite quickly for profitable results.

- There will be plenty of pin bar formations but be patient and choose only good ones.
You will get lots of chances. If want more, then try different time frame to identfy.
But remember higher the time frame, higher the chances it will give good result & with certainty.


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[4xpipcounter]

Vikrit, I am definitely not an expert on this formation, but I believe what I have observed is what you have confirmed. After Pinocchio's nose was formed, then price comes down and forms that levels chart S. Once it is broken, that is the entry.
Please correct me if any part of that is wrong.

What I've also noticed is that when the support or resistance is broken, there is virtually no retracement back to the point. That is unlike a TL break or even the break of a 1-2-3 formation.
I'd like to hear your input on that.

I'm going to enjoy this thread. I hope it keeps running.

Following image showing conservative entry and stop loss -

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[vikrit]

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example of good and invalid formation-

chart courtesy - 4xpipcounter

 

[vikrit]

Vikrit, I am definitely not an expert on this formation, but I believe what I have observed is what you have confirmed. After Pinocchio's nose was formed, then price comes down and forms that levels chart S. Once it is broken, that is the entry.
Please correct me if any part of that is wrong.

What I've also noticed is that when the support or resistance is broken, there is virtually no retracement back to the point. That is unlike a TL break or even the break of a 1-2-3 formation.
I'd like to hear your input on that.

I'm going to enjoy this thread. I hope it keeps running.

nose pointing up then price will come down, we will enter short when low of pinbar break (conservative entry). but sometimes may possible next bar open below than low of pinbar, then miss some points. For aggressive trade, entry can be possible on nearby close of pinbar candle on same day at closing time.

But if nose pointing down and then price will go up, so we will enter long when high of pinbar break.


i am also a student, not expert. Have seen sometimes retracement happened, and even price hit SL and go in nose direction. But very few times specially if it is a good formation.

 

[4xpipcounter]

image hosting

Vikrit, what do you think? Would this be considered an exception to the rule? If it is, then within the paradigm you mentioned for a stop, would the trade have been stopped out above the nose?

 

[4xpipcounter]

Would you say a more aggressive entry could be after the nose is formed, and it is in line with a confluence of other indications, then to enter after the nose is formed?

BTW, I've been looking a lot into and studying this formation, because, like the 1-2-3, there is very similar price actions and breaks associated with its formation. Within the strict scope of my methodology, there have been strong moves after these formations have been made in lieu of other events within my methodology.

nose pointing up then price will come down, we will enter short when low of pinbar break (conservative entry). but sometimes may possible next bar open below than low of pinbar, then miss some points. For aggressive trade, entry can be possible on nearby close of pinbar candle on same day at closing time.

But if nose pointing down and then price will go up, so we will enter long when high of pinbar break.


i am also a student, not expert. Have seen sometimes retracement happened, and even price hit SL and go in nose direction. But very few times specially if it is a good formation.