Bottom reversal pattern: Piercing line

Behind each Sun line, the bullish sentiment of the market is often brewing.

In some cases, the big sun line may also indicate that the trend will reversal from bearish to bullish.

This article will introduce a bullish reversal candlestick pattern - piercing line.

What is a piercing line?

A piercing line is a bullish reversal candlestick pattern consisting of two candlestick, usually appearing in a downtrend.

The first candlestick pattern of the piercing line is the yin line, which is relatively large, indicating that the day's quotes are firmly controlled by the short.

The second candlestick is the positive, which opens below the lowest price of the first bar (thus creating a falling gap), closing price higher than the central position of the first candlestick entity.

Yang has released the potential signal of market reversal, as it embodies the significant influence of the long on the market.

How are piercing threads formed?

Piercing lines usually appear in a downtrend, at which point the share price may be at a staged low.

The first candlestick of the piercing line is the yin, with a relatively large entity, indicating a large pressure on the market day, and the stock price fell noticeably after opening.

The second candlestick of the piercing line is the positive, and the opening price is lower than the lowest price of the first bar, creating a falling gap indicating that the market still fills a bearish atmosphere when opening that day.

However, over time, the long enters gradually, and the market reverses. As of closing, the second candlestick broke through the center of the first candlestick entity, forming a piercing pattern.

The piercing line indicates that the share price may find support near the fall gap, long or take further action in the short term.

How to identify a piercing line?

In actual combat, investors can focus on the following points to better identify piercing line patterns.

• Downtrend

A piercing line usually appears in a downtrend and is the potential signal of a market to rise by a decline.

• The first K-line

The first candlestick should be a yin and have a larger entity, indicating that the short is firmly in control of the market.

• Second K line

The second K-line should be the positive, and the closing price should be higher than the center position of the first K-line entity, indicating that the long began to pull the tide.

• Falling gap

There should be a falling gap between the two klines. To be precise, the opening price of the second bar should be lower than the lowest price of the first bar.

• Confirmation of morphology

Investors generally further confirm the reliability of bullish signals by observing whether the next candlestick of the piercing pattern is closed up.

case analysis

The chart below shows a piercing line pattern that appears on the daily chart of the NFLX share price.

• Before the piercing line pattern, the price of the Nai Fei stock was on a downward trend.

• The first candlestick of the piercing line is the big yin line, which is part of this round of downtrend.

• The second bar of the piercing line is low, closing price is higher than the center position of the first K-line entity, suggesting that the long began to counterattack, the market may stop and rebound in the short term.

• On the next trading day after the piercing line pattern, the share price rose sharply and bullish signals are further confirmed.

summed

A piercing line is a bullish reversal pattern consisting of two candlestick, which usually appears in a downtrend.

The piercing line pattern helps long traders confirm potential entry opportunities, but this doesn't always work.

In actual combat, candlestick patterns should be combined with other technical analysis tools to better assist trading decisions.