Piercing pattern is a trend reversal patters. This is a two candlestick pattern. The Bullish piercing pattern is witnessed in the charts of CIPLA on 20-Jan-2019. The conditions of Bullish piercing pattern and the qualification of that pattern is as explained below.
The conditions and qualification of the pattern:
1) There should be a prior down trend. – Yes. Down trend noticed before this pattern.
2) The Green body should cover the LOW of the previous day’s Red candle. – Yes It is witnessed
3) The Green candle’s body should cover at-least 50% mark of previous body. – Yes. It is witnessed.
4) The upper tail should be small in size. – Yes. It is qualified.
The trading plan: LONG
Entry Price: Rs. 507.55 (Above the HIGH of the piercing day)
Stoploss: Rs.483.75 (Lowest of the piercing day )
Target Price: Rs.531.35 (Considering the Risk to reward of 1:1 ratio)
The result of the trade: Target Achieved in 5 days.
