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1. After a price fall, Latest candle must cover previous candle’s low (for bullish)
After a price rally, latest candle must cover previous candle’s high (for bearish)
2. Latest candle body must cover at least 50% of previous candle body.
3. Upper tail must be invisible or very short.
Bullish piercing: Entry- Highest of 2 candles. SL- Lowest of 2 candles.
Bearish piercing- Entry- Lowest of 2 candles. SL- Highest of 2 candles.
Piercing pattern is a type of candlestick pattern.
Conditions: The recent candlestick should cover at least half of previous candlestick. The upper tail of recent candlestick should be small in size.
Buy when price is more than 2nd previous day highest. Sell after it reaches exit price.
When the current candlestick covers previous days low and the body covers more than half of previous days body it is bullish piercing
it should have very small or invisible upper tails. Buy at the highest price of previous 2 days.
when the current candlestick covers previous days high and the body covers more than half of previous days body with small or invisible lower tail it is bearish piercing. Buy at previous 2 days lowest trade price.
When there is a down trend for a few days and suddenly a green candle appears and this candle has a much lower opening then the previous day with a lower bottom than previous day and able to cross 50% of the body of the previous bearish candle and with a decent length wick not crossing the previous day open. This qualifies for a piercing pattern candle. When the candle crosses the previous two days high, a buy signal is given for long and sell should be equivalent to the difference between the previous two days high and low value as the sell value.
Piercing pattern means trend reversal. If the latest candlestick is green and if it manages to cover the 50% of previous candlestick, and upper tail is small in size, then it is piercing pattern, then we can buy if the price is more than previous high. we can sell when the price moves below the previous low.
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