What is piercing pattern? What are its conditions to qualify? When to buy and Sell?

[Jyothirmayee]

<p style=”text-align: left;”>The green body covers more than half of the previous red body and top and bottom tails should be visible.</p>

[R . Vinay Kumar]

Piercing patterns are used to identify trend reversal.

Conditions :

– Recent fall/rise in price.

– The candlestick must cover the previous day low.

– The candlestick must cover 50% of previous candlestick.

-The upper tail must not be very high.

Buy :  above previous 2 day high , stop loss :  engulfing low (long position )

Sell :  below previous 2 day low , stop loss : engulfing high (short position)

 

–

[Annesh]

<div id=”MainContent_Div1″ class=”divisiontext”>This is a bottom reversal pattern with two candlesticks. A black candlestick appears on the first day while a downtrend is in progress. The second day opens at a new low, with a gap down and closes more than halfway into the prior black body, leading to the formation of a strong white candlestick.</div>
<div class=”divisionheader”></div>
<div id=”MainContent_DivHeader2″ class=”divisionheader”>Recognition Criteria</div>
<div id=”MainContent_Div2″ class=”divisiontext”>1. The market is characterized by a prevailing downtrend.
2. A black candlestick appears on the first day.
3. A white candlestick opens on the second day with a gap down and closes more than halfway into the body of the first day.
4. The second day fails to close above the body of the first day.</div>

[Maruti Patil]

piercing pattern: the body should cover the previous days low

condition: the upper tail should not be very big

green color

trend reversal

prior trend to be negative

green body should cover the low of the previous body and 50% more

Buy: if the price goes highest of two days

[Shantanu]

1. Current day’s candlestick body completely covers the lower part of previous days’ body
2. Current day’s candlestick body covers 50% or more of the previous days’ body
3. Upper tail shouldn’t be high

If all the above conditions are satisfied,we can qualify the pattern as Piercing Pattern.

One can buy when the price is at the previous day’s high and can keep the stoploss at current day’s low (for Bullish Pattern).

[Author]

Posts