Company: NIFTY top 50 Index
Chart Type: Candlestick type
Piercing Pattern is one of trend reversal like Engulf pattern. While Engulfing Pattern covers body of previous candle, Piercing Candle opens at lower than low of previous candle (w.r.t. Bullish trend) and moves up to 50% of level covering previous RED candles’ body. As such Piercing is more powerful than Engulfing.
Enclosed chart reflects the characteristics of Bullish Piercing Pattern covering:
1. * Successive trades moving the trend downwards prior to Piercing candle
2. *Next successive trade also opens at new low than the previous candle and appears to continue towards downward trend. However, it recovers fast upwards surpassing the open level and covers almost the body of previous RED candle . (Requirement to be qualified as piercing candle is, price level requires to cover at least 50% body of previous candle.)
3. * This piercing behaviour pushes prices up signalling upward trend (Bullish) and thus reversing the earlier bearish Pattern.