Bullish Piercing Candlestick Pattern: Definition, Example

Telegram Group Join Now

Bullish Piercing Candlestick Pattern: As we have seen in our previous blog post, 35 Powerful Candlestick Patterns pdf, the bullish piercing candlestick pattern is a bullish reversal pattern. We can find this candlestick pattern at the bottom of the downtrend or in the support zones. In this blog post, we will understand piercing patterns in detail, like what is a piercing pattern, how to identify it, how to trade it, etc., so without wasting further time, let’s start!

What is a Bullish Piercing Candlestick Pattern?

The Piercing pattern is a bullish reversal candlestick pattern. It indicates a reversal in an ongoing downtrend, which means the trend will change from down to up when this pattern appears in a continuous downtrend.
The piercing pattern consists of two candlesticks, in which bears and bulls fight for price control.

As I said, the piercing pattern consists of two candlesticks, the first being a big red candle indicating an ongoing downtrend. Then, the second candle is a big green candle that opens the gap down below the previous red candles closing.

bullish piercing candlestick pattern
— Piercing Candlestick Pattern

The pattern is only called the bullish piercing candlestick pattern when the second green candle pierces the first red candle more than 50%. Pierce means the second candle is supposed to close above the middle of the real body of the first candlestick.

We add new buying positions when we find this bullish piercing candlestick pattern, and if we have a selling position, we should exit it.

Formation of Piercing Candlestick Pattern

The formation of a bullish piercing candlestick pattern happens in a downtrend, which means we can find this pattern in an ongoing downtrend near support zones.

The Piercing pattern consists of two candles. The first candle is bearish, representing a continuation of the downtrend, and the next candle opens the gap down. Still, it covers the first bearish candle by more than 50%, which shows that bears are getting weaker in the downtrend, and buyers are back, which indicates a downtrend is about to reverse. And a new uptrend will begin.

Formation of Piercing Candlestick Pattern
— Piercing Candlestick Pattern

There are more bullish reversal patterns that I use most, such as Bullish Engulfing Candlestick Pattern, Morning Star Candlestick Pattern, Hammer, Inverted Hammer, Bullish Harami etc.

Example of Piercing Pattern

Example 1

bullish piercing candlestick pattern example
— Bullish Piercing Candlestick Pattern

As you can see in the first example, It’s Reliance IND’s one-day time frame chart. In which the initial trend was completely downtrend. Then, after the lower-low price made a higher low, we can see a bullish piercing candlestick pattern formation on the higher-low level. This confirms our entry, and We can enter on the green candle’s closing with stop loss below the low of the piercing candlestick pattern. After piercing pattern formation, those big green candlesticks show how strong trend reversal is.

Example 2

bullish piercing candlestick pattern example
— Bullish Piercing Candlestick Pattern

As you can see in the second example, It’s Sunpharam LTD’s one-day time frame chart. In which the initial trend was completely downtrend. And at lower-low, we can see the formation of a bullish piercing candlestick pattern, and then the price trend reverses. The next candles were very healthy and powerful, which indicates the presence of buying pressure.

Things to Consider While Trading Piercing Candlestick Pattern

We should consider a few things while trading a bullish piercing candlestick pattern; if you keep these things in mind, you will most probably trade with a piercing pattern successfully. Things are:

  1. The trend must be a downtrend cause this is a bullish reversal candlestick pattern.
  2. We should look for support, which can be trendline support, horizontal line support, support zone, ema support, etc.
  3. The green candle should open below the previous red candle closing. This means a gap should exist between the red candle closing and the green candle opening.
  4. The green candle should pierce the red candle more than 50%. 
  5. Both candles must have good, healthy bodies, which indicates a strong reversal.

Conclusion

The bullish piercing candlestick pattern is made of two candlesticks. It is a bullish reversal candlestick pattern, which reverses the downtrend, and when this pattern appears, a new uptrend begins. We can find this pattern at the bottom of the downtrend, but you should also check other factors, such as support levels, indicators, etc., for more confirmation.

Frequently Asked Questions (FAQs)

Is piercing pattern bullish or bearish?

The piercing pattern is a bullish reversal candlestick pattern, which we can find at the bottom of a downtrend. It consists of two candlesticks: a long red candlestick followed by a long green candlestick that opens below the previous candle’s low but closes above more than 50% of the first red candlestick.

What is a piercing candlestick pattern?

The Piercing pattern is a bullish reversal candlestick pattern. It indicates a reversal in an ongoing downtrend, which means the trend will change from down to up when this pattern appears in a continuous downtrend.

Gravatar

An aspiring Finance student became obsessed with the stock market and decided to help beginners learn about it more easily. Created a website that would provide strategies and technical knowledge on how to get started in the stock market.

Leave a Comment