I'm afraid this blog post is all about the FTSE 100, and doesn't mention any of the major forex pairs. However you may still find it useful because you can still trade similar positions on the various forex pairs when opportunities present themselves.

I have been reading a lot about pin bar reversals in the last few months and have recently started trading a few positions, mainly on the daily chart and the 4 hour chart, and sometimes on the 1 hour chart as well.
 
I was looking for a possible reversal on the FTSE 100 this week as I just felt it was running out of momentum and the European debt crisis continues to loom large in the background. Plus it always struggles to go any higher once it gets above 6000.

I could have waited for the EMAs to cross downwards on the 4 hour chart, despite the Supertrend indicating an upward trend on the daily chart, but I preferred to try and find a pin bar reversal because this gets you into a position a lot earlier.

There was nothing doing on the daily chart, but dropping down to the 4 hour chart there was a near-perfect pin bar early this morning (between 4.00 and 8.00 UK time).

As you can see, the price has been hovering just above 6000 for several days now and looked ripe for a fall, so the pin bar this morning was the signal I had been waiting for.

A pin bar is basically where the open and close are very close together and either in the top or bottom 1/3 of the overall bar (or candle in this case). The long part of the pin should ideally be extending out of the current trading range in the same direction as the current trend, which was the case here. Ideally you also want it to be close to a major support or resistance level, and 6000-6100 has indeed been a big area of resistance in recent months.

These pin bars are basically telling you that the price tested new highs, briefly breaking upwards out of the current trading range, but traders didn't have the desire to take it higher and quickly sold it back down again, closing close to where it opened.

So as soon as this candle closed and the price broke below the lows of this pin bar, this was a signal to go short, which is exactly what I did soon after the London market opened at 8.00.

The pin bar was just over 25 points in length, so this was always going to be my initial target where I would close half the position. Luckily this target was triggered earlier. However after moving my stop loss to break-even, I was taken out of the second half of the position at this break-even point, which was a shame because I thought it could easily fall to 5900 in the coming days.

Anyway the point was that this was a good example of a high probability pin bar reversal. It did generate an easy profit of 25 points and it could easily have been a lot more than this in total on another day.

Hopefully the price will stay above 6000 and there will another pin bar so I can go short once again.