Giles Coghlan LLB, Lth, MA
Financial Source
The piercing pattern
Some candlestick price patterns are well known, like shooting stars, hammer reversal bars, and engulfing bars. However, some of the less well-known candlestick price patterns are worth noting when reading price charts. This is particularly helpful when you are managing a position on the longer-term charts. First, let’s look at the piercing pattern with an example of how this looks from Apple’s price charts.
The piercing pattern described
The piercing pattern is a candlestick pattern used in trading to show that a downtrend might be ending and the price could start going up. It has two candlesticks. It is particularly useful when assessing whether a downtrend is about to come to an end. The pattern is subtle and easily overlooked, so this is what to specifically look for. Note the gap that is needed for the second candlestick pattern.
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Candlestick 1: The first candlestick in the pattern is a bearish candlestick, indicating selling pressure. It represents a continuation of the existing downtrend and opens near or above the previous candlestick’s close.
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Candlestick 2: The second candlestick is a bullish candlestick, which opens lower than the previous candlestick’s close. Note: There is a price gap between the close of the first candlestick and the open of the second candlestick. Intraday, it would look like the bears are taking prices to even lower lows. However, the tide changes with the second candlestick.
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Close of candlestick 2: The crucial aspect of the piercing pattern comes with the second candlestick, as it must close at least halfway into the real body of the first candlestick. In other words, the second candlestick’s closing price is significantly higher than the first candlestick’s midpoint.
The piercing pattern on the charts
Take a look here for a market example of what candlestick 1 and candlestick 2 from the Apple Weekly chart should look like.
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Editors’ Picks
EUR/USD loses the grip, returns to the 1.1900 region
EUR/USD now comes under a sudden bout of selling pressure, slipping back to the area of two-day lows near 1.1900 the figure on Thursday. The pair’s daily pullback comes on the back of the continuation of the rebound in the US Dollar as investors evaluate the Fed’s interest rate decision and rising geopolitical concerns.
GBP/USD drops to two-day lows near 1.3750
GBP/USD faces some increasing selling pressure, building on Wednesday’s losses and revisiting the 1.3750 zone on Thursday. Cable’s decline to two-day lows comes in response to the marked advance in the Greenback while traders have started to shift their focus to next week’s BoE gathering.
USD/JPY remains steady near 153.50 with Tokyo CPI in focus
The US Dollar is gaining the upper hand against the Japanese Yen, with both currencies among the worst G8 performers this week. The pair trades near 153.50 at the time of writing, consolidating its recovery from three-month lows near 152.00, as the focus shifts to the Tokyo CPI reading, due later on the day.
Editors’ Picks
Gold retreats from records, now what?
Gold accelerates its daily correction and retests the $5,100 region per troy ounce, turning negative for the day and fading the earlier bull run to all-time highs around $5,600. The precious metal’s steep sell-off comes on the back of the better tone in the Greenback and mixed US Treasury yields.
EUR/USD loses the grip, returns to the 1.1900 region
EUR/USD now comes under a sudden bout of selling pressure, slipping back to the area of two-day lows near 1.1900 the figure on Thursday. The pair’s daily pullback comes on the back of the continuation of the rebound in the US Dollar as investors evaluate the Fed’s interest rate decision and rising geopolitical concerns.
GBP/USD drops to two-day lows near 1.3750
GBP/USD faces some increasing selling pressure, building on Wednesday’s losses and revisiting the 1.3750 zone on Thursday. Cable’s decline to two-day lows comes in response to the marked advance in the Greenback while traders have started to shift their focus to next week’s BoE gathering.
Bitcoin slides below $85,000 as US stocks sell off, Gold outperforms
Bitcoin (BTC) broke below $85,000 in the North American session on Thursday, dropping nearly 3% in the one-hour timeframe. The move has seen the largest crypto by market cap erase over 5% of its value within the past 24 hours, briefly reaching $84,400, its lowest level since December 1, according to Binance data.
Federal Reserve pauses, sees economy on firm footing
At its January meeting, the Federal Reserve kept the Fed Funds Target Range (FFTR) unchanged at 3.50%–3.75%, a decision that was fully in line with market expectations.
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