What is piercing signal candlestick pattern?

A piercing Signal pattern is a technical trading signal that is formed by a closing down day with a good-sized trading range, followed by a trading gap lower the following day with a Green candlestick that covers at least half of the upward length of the previous day’s red candlestick body, finishing with a close higher for the day. A piercing pattern often signals the end of a small to moderate downward trend.

Piercing candlesticks patterns

Piercing Pattern is a reversal candlestick pattern which is bullish in nature and appears at the end of a down trend. It is a complex pattern made of two candle lines. The first candle is bearish in nature and the second is bullish in nature.

It has its name because the prices pierces up through the falling market. It is one of the important pattern, which you should give attention.

Following conditions must exist to be valid the Piercing signal:

The stock must have been in a definite downtrend before this signal occurs. This can be visually seen on the chart.

The second day of the signal should be a green candle opening below the low of the previous day and closing more than half way into the body of the previous day’s red candle.

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