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When the current candlestick covers previous days low and the body covers more than half of previous days body it is bullish piercing.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
after a uptrend if a red candle stick is formed covering more than half the body of the previous candle stick, it is called piercing pattern. We hay sell the stock then. Similarly vise vera during a downtrend.
Bullish Piercing pattern is a scenario in a stock price movement, where:
- The latest positive(green) body should cover the previous day low.
- The latest positive(green) body should cover at least 50% of the previous day negative(red) body.
- The upper tail on the latest positive body should be very short.
- Volume may increase.
- This should appear as Trend Reversal pattern i.e., only after a recent price fall.
Entry price : The price point at which the price crosses the highest price of the two days(piercing day and previous day).
Stop loss : Lowest price on the piercing day.
Exit price : Difference between Entry price and Stop loss is Risk taken. Exit price = Entry price + Risk taken.
Bearish Piercing pattern is the inverse of this.
Piercing pattern is a down trend for a few days and suddenly a green candle appears this candle has a much lower opening than the previous day with a lower bottom and is able to cross 50% of the lower body this qualifies for a piercing pattern. when the candle crosses a 2 day high a Buy signal is given stop loss on the lowest price on the piercing day.
Recent price fall encounters a positive trend which start with negative , which cover previous day low and a upward trend which covers 50% of the previous day body.
the upper tail should be small as possible.
Buy: when price movement crosses the highest price on the day before piercing day.
Sell: difference between the Buy and stop loss above the buy price
Stoploss: Lowest price on the piercing day.
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