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Type: Reversal
Relevance: Bullish
Prior Trend: Bearish
Reliability: High
Confirmation: Suggested
No. of Sticks: 2



Definition: Get the highest rated stock from Americanbulls for this pattern >>>

Bullish Piercing Line Pattern is a bottom reversal pattern. A long black candlestick is followed by a gap lower during the next day while the market is in downtrend. The day ends up as a strong white candlestick, which closes more than halfway into the prior black candlestick’s real body.

Recognition Criteria:

1. Market is characterized by downtrend.
2. We see a long black candlestick.
3. Then we see a long white candlestick whose opening price is below previous day’s low on the second day.
4. The second day’s close is contained within the first day body and it is also above the midpoint of the first day’s body.
5. The second day however fails to close above the body of the first day.

Explanation:

The market moves down in a downtrend. The first black real body reinforces this view. The next day the market opens lower via a gap. Everything now goes, as bears want it. However suddenly the market surges toward the close, leading the prices to close sharply above the previous day close. Now the bears are losing their confidence and reevaluating their short positions. The potential buyers start thinking that new lows may not hold and perhaps it is time to take long positions.

Im

Source(s)

portant Factors:

In the Bullish Piercing Pattern, the greater the degree of penetration into the black real body, the more likely it will be a bottom reversal. An ideal piercing pattern will have a real white body that pushes more than half way into the prior session’s black real body.

A confirmation of the trend reversal by a white candlestick, a large gap up or by a higher close on the next trading day is suggested.

http://www.candlesticker.com/Cs39.asp

by
Tyce
Tyce
1 year ago
 

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The bullish piercing line candlestick consists of a downward candlestick (e.g. a red candlestick), followed by an upward candlestick (e.g. a green candlestick) that opens below the close of the previous candlestick (i.e. a gap down), and closes above the middle of the previous candlestick.

The bullish piercing line pattern can occur in a number of different contexts (e.g. at the beginning of a trend, during a trend, at the end of a trend, etc.), but it is most relevant when it occurs during a significant downward trend. The bullish piercing line can be used as an indication of the end of a downward trend, and therefore can be used as both a trade entry and a trade exit pattern (i.e. an exit from a short trade, and/or an entry into a long trade). Note that if the second candlestick does not close above the middle of the first candlestick, that a different (and bearish) pattern is created instead.

Source(s):

http://daytrading.about.com/od/ candlestickpatterns/a/PiercingLine.htm

by
Kingpin
Kingpin
1 year ago

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Bullish Piercing Line Pattern is a bottom reversal pattern. A long black candlestick is followed by a gap lower during the next day while the market is in downtrend. The day ends up as a strong white candlestick, which closes more than halfway into the prior black candlestick’s real body.

Recognition Criteria:
1. Market is characterized by downtrend.
2. We see a long black candlestick.
3. Then we see a long white candlestick whose opening price is below previous day’s low on the second day.
4. The second day’s close is contained within the first day body and it is also above the midpoint of the first day’s body.
5. The second day however fails to close above the body of the first day.

Explanation:
The market moves down in a downtrend. The first black real body reinforces this view. The next day the market opens lower via a gap. Everything now goes, as bears want it. However suddenly the market surges toward the close, leading the prices to close sharply above the previous day close. Now the bears are losing their confidence and reevaluating their short positions. The potential buyers start thinking that new lows may not hold and perhaps it is time to take long positions.

Important Factors:
In the Bullish Piercing Pattern, the greater the degree of penetration into the black real body, the more likely it will be a bottom reversal.

by
Suneetha
Suneetha
1 year ago

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The higher day-two closes into the first day candlestick body, the higher the chance of the downtrend bottoming out. If the second day candle does not trade above the midpoint of the first day body, traders typically feel it safer to wait for confirmation on the third day. Some traders wait for confirmation regardless of how deep the bullish Piercing Line penetrates the second day.

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thegreeks
thegreeks
1 year ago

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After an established trend, day-one is a long red day
• The second day is a blue candle that closes above the midpoint of the first days body.


The market continues the downtrend on the first day. By day-two buyers take price up to close near the open of the previous day.

In FX, traders view the lower the second day low the better, since the bigger the sell-off after the open the more buyers were able to drive price back up.

• Confirmation and Signal Strength
This formation suggests bulls have begun to take charge of the market, and shorts have been shaken by the sudden lost of bearish momentum. Rallying days are common after this formation as more buyers confidently to enter the market with a clear stop benchmark at the second day low.

The higher day-two closes into the first day candlestick body, the higher the chance of the downtrend bottoming out. If the second day candle does not trade above the midpoint of the first day body, traders typically feel it safer to wait for confirmation on the third day.

Some traders wait for confirmation regardless of how deep the bullish Piercing Line penetrates the second day.

In non-FX markets, traders want to see the second day gap down, opening below the close of the previous day. Because the Forex Market offers continues 24 hour markets, such gaps are not typically possible. But FX traders will turn to the low of the second day to indicate how strong the opening sell-off is, to gauge the strength of the subsequent bull

Source(s):

fxwords.com

by
fuji022
fuji022
1 year ago

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The Piercing Line Pattern is a bullish Japanese Candlestick reversal formation which appears during a downtrend, with the first candle long bodied and bearish. The following candle price open at a new low, but trades higher and close at a level where the candle reaches above the midpoint of the previous candle’s body.

It is the opposite of the Dark Cloud Cover pattern.

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fxpie
fxpie
1 year ago

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The piercing line is one of the first signs that a potential bullish reversal is in play. Traders should wait for the high of the first candlestick in the pattern to be exceeded prior to taking a long position. Stops can conversely be placed below the low of the first candlestick of the formation. The more the second candle or kirikomi closes above the mid-point of the first candlestick, the greater the odds of a successful piercing line reversal pattern.

by
Harold
Harold
1 year ago