Share:

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.

  • 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.

  • 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.

  • 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.

Chart


Learn more about HYCM

Our products and commentary provides general advice that do not take into account your personal objectives, financial situation or needs. The content of this website must not be construed as personal advice.

Editors’ Picks

EUR/USD holds gains above 1.0650 amid risk-on mood

EUR/USD holds gains above 1.0650 amid risk-on mood

EUR/USD is clinging to recovery gains above 1.0650 in European trading on Monday. The pair regains lost footing, as markets remain upbeat and weigh negatively on the safe-haven US Dollar. Markets reposition ahead of key Eurozone and US data due later this week. 

EUR/USD News

GBP/USD: Rebound from YTD low stalls below 1.2400

GBP/USD: Rebound from YTD low stalls below 1.2400

GBP/USD attracts some dip-buyers on Monday amid a softer US Dollar but the rebound remains capped below 1.2400. Easing geopolitical tensions boosts investors’ confidence and undermines the safe-haven Greenback. A light UK and US calendar lies ahead. 

GBP/USD News

USD/JPY: Japanese Yen remains pinned near multi-decade low against USD

USD/JPY: Japanese Yen remains pinned near multi-decade low against USD

The Japanese Yen remains on the defensive amid the BoJ’s uncertain policy outlook. A positive risk tone also undermines the JPY, though intervention fears limit losses. Reduced Fed rate cut bets act as a tailwind for the USD and lend support to USD/JPY. Traders now seem reluctant ahead of this week’s key central bank event and data risks. 

USD/JPY News

Editors’ Picks

EUR/USD holds gains above 1.0650 amid risk-on mood

EUR/USD holds gains above 1.0650 amid risk-on mood

EUR/USD is clinging to recovery gains above 1.0650 in European trading on Monday. The pair regains lost footing, as markets remain upbeat and weigh negatively on the safe-haven US Dollar. Markets reposition ahead of key Eurozone and US data due later this week. 

EUR/USD News

GBP/USD: Rebound from YTD low stalls below 1.2400

GBP/USD: Rebound from YTD low stalls below 1.2400

GBP/USD attracts some dip-buyers on Monday amid a softer US Dollar but the rebound remains capped below 1.2400. Easing geopolitical tensions boosts investors’ confidence and undermines the safe-haven Greenback. A light UK and US calendar lies ahead. 

GBP/USD News

Gold returns to the red after failing above $2,400 yet again

Gold returns to the red after failing above $2,400 yet again

Gold price extends pullback as Middle East fears calm down. US Dollar weakens amid upbeat mood, despite rebounding US Treasury bond yields. Gold price targets $2,350 on a sustained break below 50-SMA at $2,370 on the 4H chart.

Gold News

XRP jumps above $0.50 as Ripple is set to file opposition brief in SEC lawsuit

XRP jumps above $0.50 as Ripple is set to file opposition brief in SEC lawsuit

XRP price climbed to a high of $0.54 on Monday, hours before Ripple files its response to the Securities and Exchange Commission (SEC) remedies-related opening brief. 

Read more

All eyes on Lagarde – Stock markets remain in correction/sell-on-upticksmode

All eyes on Lagarde – Stock markets remain in correction/sell-on-upticksmode

Today’s eco calendar won’t move markets with EMU April consumer confidence the sole important release. ECB President Lagarde gives a lecture at Yale university, but she’ll stick to previous comments.

Read more

RECOMMENDED LESSONS

7 Ways to Avoid Forex Scams

The forex industry is recently seeing more and more scams. Here are 7 ways to avoid losing your money in such scams: Forex scams are becoming frequent. Michael Greenberg reports on luxurious expenses, including a submarine bought from the money taken from forex traders. Here’s another report of a forex fraud. So, how can we avoid falling in such forex scams?

What Are the 10 Fatal Mistakes Traders Make

Trading is exciting. Trading is hard. Trading is extremely hard. Some say that it takes more than 10,000 hours to master. Others believe that trading is the way to quick riches. They might be both wrong. What is important to know that no matter how experienced you are, mistakes will be part of the trading process.

Strategy

Money Management

Psychology