Company : Coal India Ltd., Public Sector in Coal mining Business.
Chart type : Candlestick, as Piercing pattern requires analysis with two successive trade session to qualify the pattern.
Piercing Pattern is one of trend reversal like Engulf pattern. While Engulfing Pattern covers body of previous candle, Piercing Candle opens at Higher than high of previous candle (w.r.t. Bearish trend) and moves downward to 50% level of previous Green candle’s body. As such Piercing is more powerful than Engulfing.
Enclosed chart reflects the characteristics of Bearish Piercing Pattern covering:
(a) Successive trades moving the trend upwards prior to Piercing Red candle
(b) Next successive trade also opens at new high than the previous candle and appears to continue towards upward trend. However, it drops fast downwards surpassing the open level and covers more than 50% level of body of previous Green Candle.
(c) This piercing behaviour pushes prices down signalling downward trend (Bearish) and thus reversing the earlier bullish Pattern.
