Trading reversals with pinbars and the support/resistance levels at Olymp Trade


Pinbars and support-resistance

The support and resistance levels are of great importance to the technical analysis during trading. But they won’t tell you much when using it alone. You need to put them together with another indicator or simply with a certain candle type. They can work very well with pinbars. And this is the subject of this guide. I would like to show you how to trade the trend reversals with the support/resistance levels in combination with pinbars.

Pinbars candles overview

There are many types of candles. One of them is a pinbar. Its body is very small and the wick on one side very long. Usually twice as long as the body. On the other end, there might be a small wick or no wick at all. When a long shadow is pointed down, they can be called the bullish pinbars. When the shadow is directed upwards, these are the bearish candles.

Bullish and Bearish Pinbars on Olymp Trade
Bullish and Bearish Pinbars on Olymp Trade

The pinbar’s value in trading

The development of the pinbar indicates a strong fight between bulls and bears. In the times of the uptrend, you may have encountered the bearish pinbar. The closing price is far away from the end of the wick and you can expect the trend to reverse. If there was a downtrend and a bullish pinbar developed there is a chance for an uptrend to begin.

The support/resistance levels overview

The price seems to fluctuate within a certain range. When it goes down, reaches the level, and bounces back this will mark the support level. When the price rises, then stop and returns, we can talk about the resistance. Sooner or later, these levels will be, however, broken. To know more about them, read our guide about trading support/resistance levels.

How to use pinbars with the support/resistance levels

So the price fluctuates within a certain range and it is not easy to tell when it will go beyond, using only the support/resistance. But when we add the pinbars, it will become a simple task.

Pinbars with support-resistance lines
Pinbars with the support/resistance lines

Look at the picture above. When the price is nearing the support or resistance level, it can either break it or reverse. The appearance of the pinbar is a clear sign that the bulls or bears stepped into the battle and they stopped the price from moving in the previous direction. Thus, the price reverses. Be aware, however, of a false breakout.

Just follow a few rules while trading with the use of the pinbars and the support/resistance levels

  • Enter a long trade when the price hits the support level and you see a bullish pinbar.
  • Enter a short trade when the price reaches the resistance level and you notice a bearish pinbar is forming.
  • Enter the trades for at least 10 minutes if you are using 5-minute interval candles.

Using the pinbars alongside the support/resistance levels on the Olymp Trade platform

Take a look at the chart below. The price was going up and down until it reaches the resistance level. The first time there was no pinbar. But the second time a bearish pinbar developed on the resistance level. This is a sign to sell.

Sell when you identify bearish pinbar on resistance level
Sell when you identify a bearish pinbar on the resistance level

In the picture below you can first notice a bullish pinbar on the support level. You should enter a long position here (1). There is also visible the second possibility to enter the trade, this time in the form of a bearish pinbar on the resistance level. Open a sell position here.

Buy when you identify bullish pinbar on support level (1)
But when you identify a bullish pinbar on the support level (1) and sell with a pinbar at the resistance level (2)

These are some basic rules you should know if you are interested in trading with the pinbars alongside the support/resistance levels. Try this method on the Olymp Trade demo account first. If dealing with real balance, always remember that this strategy doesn’t eliminate the risks of the market. Always be prepared to deal with losses.

I would love to hear from you. There is a special comments section below.

All the best!

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Bart Bregman

Full time day trading, and helping out with Olymp Trade wiki in my spare time to create an awesome platform for beginners. I'm a digital nomad that travels the world while working from everywhere!

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