Piercing Pattern |
Characteristic of Candlesticks: Reversal
Relevance of Candlesticks: Bullish
Prior Trend of Candlesticks: Bearish
Reliability of Candlesticks : 1st Grade
Confirmation of Candlesticks: Highly Reliable
Candlestick Patterns Key Reference |
DESCRIPTION
Piercing Pattern is followed by a long bearish candlestick at the bottom of the downtrend followed by a gap lower on the next candlestick.
The next candlestick then reverses as a long bullish candlestick that closes more than halfway of the previous long bearish candlestick's body.
Piercing Pattern is an bottom reversal pattern which is highly reliable for sharply reversing a downtrend to an uptrend.
PATTERN RECOGNITION
1. Piercing Pattern can be identified by a downtrend followed by a bottom reversal.
2. Refering to above diagram, firstly we will see a long bearish candlestick at the bottom of the downtrend.
3. Finally we will see a long bullish candlestick which opening price is below previous candlestick low.
4. The long bullish candlestick closes more than halfway through the previous candlestick real body.
EXPLAINATION
When the Piercing Pattern is formed at the bottom of a downtrend with a gap followed by a bottom reversal is extremely powerful indication of a change in sentiment.
The first bearish candlestick indicated the bear is currently in control.
The next candlestick open lower with a gap as the bear continue to push the price lower.
Suddenly the market reverse and push the price upward towards the midpoint and closed more than halfway through the previous bearish candlestick.
The second candlestick indicate bull strength with a closing price at more than halfway through the previous candlestick's real body.
This shows that the the bull is in control and the bear is losing its strength.
The 1st grade reversal patterns are the most reliable group of reversal patterns that seldom require any confirmation.
POINT TO NOTE
For Piercing Pattern, the stronger the penetration into the bearish candlestick real body, the stronger the change in sentiment which is followed by a bottom reversal.
The ideal scenario of Piercing Pattern is the second bullish candlestick that pushes more than halfway through the first bearish candlestick's real body.
CANDLESTICK PATTERNS KEY REFERENCE
Irrespective of Color (Can be bullish or bearish) |
Uptrend |
Consolidation |
Downtrend |
ANTICIPATED DIRECTION OF TREND
Lighter Arrow = Lower Probability
Solid Arrow = Higher Probability
More Likely to go sideway, Less likely to rally
|
More likely to rally, Less likely to go sideways
|
More likely to go sideway, Less likely to fall
|
More likely to fall, Less likely to go sideways |
