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Its one of the candlestick pattern
Bullish
The body should cover the previous days low.Piercing pattern:
Bullish:
Reversal pattern after a recent price fall. The price opens low and manage to move up covering the 50% of the previous day body and the upper tail should be small. Slight volume difference is expected.
Buy: When it crosses previous high and stop loss will be the days low. Reward will be the amount of risk taken.
Bearish:
Reversal pattern after a recent increase in price. <span style=”line-height: 1.5;”>The price opens high and manage to move up covering the 50% of the previous day body and the lower tail should be small. Slight volume difference is expected.</span>
Sell: <span style=”line-height: 1.5;”>When it crosses previous low and stop loss will be the days high. Reward will be the amount of risk taken.</span>
Piercing Pattern is a reversal candlestick pattern which is bullish in nature and appears at the end of a down trend. The pattern is made of two candle-lines, the first candle is bearish in nature and the second is bullish in nature.
Conditions to Qualify is as below :
1. The body should cover the previous Day’s low.
2. The current day body should cover at-least 50% of previous body.
3. The upper tail should not be very big.
We can create a long position if the body covers more than 50% of the previous days bearish candle, provided a significant volume is noticed during the formation of piercing pattern.
hammer – sign of strength, these are very reliable, powerful and appear rarely it should appear after a significant price fall, lower tail should 2 times of the body and no upper tail. body should be green in colour buy above the highest point of the hammer day. profit a+2 times of risk taken
hanging man – sign of negativity body should be red in colour upper tail should be 2 times of the real body. lower tail should be nil. sell when the price goes below the days low.
Piercing Pattern is a bullish reversal pattern that can be found at the end of a downtrend. This candlestick pattern is used as an indicator to enter a long position or exit the sell position. Piercing pattern is formed when the bulls and bears, both are fighting to gain control over the prices.
As the market is already in a downtrend, the opening price is high and the selling activity continues. At the end of the trading session, the closing price reaches the bottom and thus a bearish candle is formed.Conditions to qualify:
Firstly, the trend should be a downtrend, as the piercing pattern is a bullish reversal pattern.
Secondly, the length of the candlestick plays an important role in determining the force with which the reversal will take place.
The gap down between the bearish and bullish candlesticks indicates how powerful the trend reversal will be.
Fourthly, the bullish candlestick should close more than the midpoint of the previous bearish candlestick.
Lastly, the bearish, as well as the bullish candlestick, should have larger bodies.When to Buy: When the price goes above the previous day’s highest point(A). Stop Loss: Latest Green body’s lowest price(B). Risk = A~B and Target = A+Risk. Selling should happen at the target or at stop loss(Price goes below B)
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