Piercing Pattern

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DEFINITION of 'Piercing Pattern'

A technical trading signal that is marked by a closing down day with a good-sized trading range, followed by a trading gap (drop) lower the following day that covers at least half of the upward length of the previous day's real body (the range between the opening and closing prices), and then closes up for the day. A piercing pattern often signals the end of a small to moderate downward trend.

INVESTOPEDIA EXPLAINS 'Piercing Pattern'

A piercing pattern can serve as an indicator that it is time to either buy a stock or close out short positions because the stock may be trending upward soon. It should not, however, be used as a stand-alone indicator, but should be compared against other bullish and bearish indicators.

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RELATED FAQS
  1. How do I implement a forex strategy when spotting a Piercing Pattern?

    Upon spotting the piercing pattern two-candle formation, a forex trader who believes the pattern is correctly signaling a ... Read Full Answer >>
  2. How effective is creating trade entries after spotting a Piercing pattern?

    The piercing pattern candlestick formation is considered by traders and analysts to be a very reliable bullish market reversal ... Read Full Answer >>
  3. How do I build a profitable strategy when spotting a Piercing pattern?

    Stock traders can easily construct a trade entry strategy designed to take advantage of the trading signal derived from recognizing ... Read Full Answer >>
  4. How are Piercing patterns interpreted by analysts and traders?

    The piercing pattern, also known as the “piercing line” pattern, is a two-candle formation commonly interpreted by traders ... Read Full Answer >>
  5. Why is the Thrusting Line important for traders and analysts?

    The thrusting line candlestick pattern is commonly interpreted by traders and market analysts as a signal for trend continuation, ... Read Full Answer >>
  6. What are the most common Bullish patterns used by traders?

    There are several key bullish candlestick patterns that traders commonly use as signals to either enter buy trades or close ... Read Full Answer >>
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