1. Avoid trading Pin Bar after a sharp increase/decrease

The best way to see a pin bar decrease after a sharp increase (or a pin bar increases after a sharp drop) is to not trade. These pin bars have a very low probability of winning, regardless of whether they appear at strong resistance support. The reason is that they are mostly formed because the Bank traders take profit from their positions only.

For example:

The strong bull run has been quite profitable for the previously bought Bank traders, and they will certainly be looking for a take profit point. The only way to make profits without making the market volatile is to lock when the market is going up strongly when there are many small buy orders. When these take profit orders are matched, the market will drop and create a pin bar candle tail as shown.

Thus, the decrease of the pin bar is only the result of a round of profit-taking of the Bank trader, not a sign of a decrease.

2. Trade Pin Bars formed by Bank trader

Pin bars placed by Bank traders can be trend continuation or trend reversal. However, the trend reversal pin bar is easier to detect and easier to win.

For example:

USDJPY reverses the trend from bearish to bullish after 3 upside waves with swing lows at the same price level. These upside waves are all due to the fact that Bank traders put buy orders to cause the market to reverse. The second swing low is a bullish pin bar, after it formed and caused the Market to turn up, we know that this is because Bank trader works. Buy at the 3rd swing low.

In contrast to the uptrend reversing to the downside: in an uptrend, if you see a bearish pin bar appears at the same price with many swing Highs before, you can gradually sell to the top.

3. Only Trade Pin Bars formed during active session

Don't trade the pin bars formed during slow, low volume sessions. For example, EURUSD is the strongest traded when the European session starts until the end of the US session, so only trade pin bars are formed in this time frame.

For example:

The pin bars that form when the Market is active (with an x) are usually easier to win.