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Hi Colibri Trader,
What is the difference between the pin bar and hammer? By definition that candle seems like it can be either. Appreciate your help in advance.
Dear Farhan,
The pin bar in essence is the same as the hammer. The only difference is where they appear in the general picture.
For example hammers usually appear at market turning points, while pin bars might be considered as a continuation
signal, depending on the market conditions. For example, in an uptrend (as is the case with USD/JPY), after a slight
correction in price you can have a pin bar and it is considered a continuation candle. If the pin bar was at the bottom
of a trend, it is considered to be a hammer and a reversal is supposed to follow. As I said, there is no visual difference
and the only difference is in the place where they would appear- whether after a correction or on a market bottom. The essence
of both is that the direction towards which the wick is heading is considered to be a rejection and the one that the body is
towards is considered to be the direction, which the market should take under ideal market conditions.
I hope this helps!