How to Trade Piercing Patterns

Piercing patterns are two candlestick patterns that are found at bottom of downtrends or near support areas. The second candle pierces halfway into the first bullish candle signaling a potential reversal to the upside. Look for price to break above the second bullish candle and hold to confirm reversal and possible new bullish trend.

What Are Piercing Patterns?

A piercing pattern consists of two candlesticks that form near support levels where the second candle pierces into half or part of the first candle. Typically, when the second candle forms, it creates a bullish reversal pattern. Traders go long at the break above the second candle and use a close below it as a stop level.

These patterns are two candlestick patterns that form during a downtrend that show signs of a potential bullish reversal. The piercing pattern can be used as an indicator to buy a long position or close a short position. While piercing patterns can signal a bullish reversal, you need other indicators to confirm the move. This pattern is formed because the bulls and bears are fighting for control of direction.

The piercing pattern is formed when the bulls come in to stop a downtrend. Price is falling but the bulls come in to push it up.

The first day is a red day. The next day opens with a new low but closes at the midpoint of the real body of the first day.

The second candle tends to be green because of the bulls. The real body of a candle is made up of the open and close of the price. The upper and lower wick is the high and low of the day.

The piercing pattern gets its name because bulls come in to pierce price through the falling trend. It’s an important pattern to pay attention to.

As stated earlier, you need more than just that pattern to confirm the reversal. Patterns fail all the time and two candle patterns are no different.