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The piercing pattern is a bullish reversal pattern. The piercing pattern occurs when a bullish candle on day 2 closes above the middle of day 1’s bearish candle.
Conditions:
1. The chart shows a downtrend.
2. Bearish candle, gaps down, and bullish candle should closes above 50% of the previous day bearish candle.
Buying condition: The green candle must finish 50% above of the bearish candle indicates buying signal.
In candlestick view, when the second candle covers the first candle of about 50-70% then the pattern is called as a piercing pattern.
Bullish Piercing Pattern:
1.The prior trend should be a downtrend.
2.The first candle should be red in colour and the second candle should be green in colour.
3.The second candle should cover atleast 50-70% of the first candles body.
4.The upper tail of the 2nd candle should be as minimal as possible.
5.Volume is expected to increase in any of the two days.
6.The trader should buy after the price crosses the high of the two days with a stoploss of the low of the second day.
Bearish Piercing pattern:
1.The prior trend should be an uptrend.
2.The first candle should be green in colour and the second candle should be red in colour.
3.The second candle should cover atleast 50-70% of the first candles body.
4.The lower tail of the 2nd candle should be as minimal as possible- it indicates that there was no more time available for the sellers.
5.Volume is expected to increase in any of the two days.
6.The trader should go short when the price crosses low of the two days and should have a stoploss of the high of the second day.
In candlestick view, when the second candle covers the first candle of about 50-70% then the pattern is called as a piercing pattern.
Bullish Piercing Pattern:
1.The prior trend should be a downtrend.
2.The first candle should be red in colour and the second candle should be green in colour.
3.The second candle should cover atleast 50-70% of the first candles body.
4.The upper tail of the 2nd candle should be as minimal as possible.
5.Volume is expected to increase in any of the two days.
6.The trader should buy after the price crosses the high of the two days with a stoploss of the low of the second day.
Bearish Piercing pattern
1.The prior trend should be an uptrend.
2.The first candle should be green in colour and the second candle should be red in colour.
3.The second candle should cover atleast 50-70% of the first candles body.
4.The lower tail of the 2nd candle should be as minimal as possible- it indicates that there was no more time available for the sellers.
5.Volume is expected to increase in any of the two days.
6.The trader should go short when the price crosses low of the two days and should have a stoploss of the high of the second day.
Bullish piercing:Piercing pattern is the increase in price after a recent fall .The body should cover the previous low and 50%of the previous body.The upper tail should be small.Long position can be created when it gone passes the previous day high.Stop loss is the piercing day low.Target is the same as the inverse of stop loss.
Piercing pattern is the reversal of current price pattern.
Bullish piercing:
The body should cover the previous day’s low and atleast 50% of the previous bearish candle with the upper tail smaller in size. Long position can be created when the price crosses the last bearish candle’s high.
Bearish piercing:
The body should cover the previous day’s high and atleast 50% of the previous bullish candle with the lower tail smaller in size. Short position can be created when the price crosses the last bullish candle’s low.
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