Scribd
Upload
76 views2 pages

Piercing Pattern

The Piercing Pattern is a bullish candlestick reversal pattern consisting of a bearish candle on Day 1 followed by a bullish candle on Day 2, which closes above the midpoint of Day 1's candle. This pattern indicates a rejection of downward price movement and suggests increasing bullish sentiment if confirmed by additional technical indicators and volume. It is less strong than the Bullish Engulfing Pattern, which fully reverses Day 1's losses.

Uploaded by

kosurug
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOC, PDF, TXT or read online on Scribd
76 views2 pages

Piercing Pattern

The Piercing Pattern is a bullish candlestick reversal pattern consisting of a bearish candle on Day 1 followed by a bullish candle on Day 2, which closes above the midpoint of Day 1's candle. This pattern indicates a rejection of downward price movement and suggests increasing bullish sentiment if confirmed by additional technical indicators and volume. It is less strong than the Bullish Engulfing Pattern, which fully reverses Day 1's losses.

Uploaded by

kosurug
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOC, PDF, TXT or read online on Scribd
You are on page 1/ 2

Piercing Pattern

The Piercing Pattern is a bullish candlestick reversal pattern, similar to the Bullish
Engulfing Pattern (see: Bullish Engulfing Pattern). There are two components of a
Piercing Pattern formation:
 Bearish Candle (Day 1)
 Bullish Candle (Day 2)

A Piercing Pattern occurs when a bullish candle on Day 2 closes above the middle of Day
1's bearish candle.

Moreover, price gaps down on Day 2 only for the gap to be filled (see: Gaps) and closes
significantly into the losses made previously in Day 1's bearish candlestick.

The rejection of the gap up by the bulls is a major bullish sign, and the fact that bulls
were able to press further up into the losses of the previous day adds even more bullish
sentiment. Bulls were successful in holding prices higher, absorbing excess supply and
increasing the level of demand.

The chart below of Intel (INTC) stock illustrates an example of the Piercing Pattern:
Buy Signal

Generally other technical indicators are used to confirm a buy signal given by the
Piercing Pattern (i.e. downward trendline break). Since the Piercing Pattern means that
bulls were unable to completely reverse the losses of Day 1, more bullish movement
should be expected before an outright buy signal is given. Also, more volume than usual
on the bullish advance on Day 2 is a stronger indicator that bulls have taken charge and
that the prior downtrend is likely ending.

A more bullish reversal pattern is the Bullish Engulfing Pattern (see: Bullish Engulfing
Pattern) that completely reverses the losses of Day 1 and adds new gains.

For further study, the bearish equivalent of the Piercing Pattern is the Dark Cloud Cover
Pattern (see: Dark Cloud Cover).

You might also like