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Piercing Line - Forex Trading

Piercing Line

Piercing Line Candlestick Pattern

Piercing Line

  • The piercing pattern is a two-day candle pattern that implies a potential reversal from a downward trend to an upward trend.

  • This candle pattern typically only forecasts about five days out.

  • Three characteristics of this pattern include a downward trend before the pattern, a gap after the first day, and a strong reversal as the second candle in the pattern.

Formation of Piercing Line

  1. The pattern is preceded by a downward trend in price. (This may be only a short down trend, but if the candles appear after an upward trend in price it is not an important reversal indicator).

  2. The price gaps lower to begin the second day. (This pattern is mostly found in stocks because of their ability to have overnight gaps unlike currencies or other 24-hour trading assets. This pattern may occur in any asset class on a weekly chart however).

  3. The second candle must close above the mid point of the first candle. (This signifies that buyers overwhelmed sellers on this day.)







FLAG Pattern


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