Piercing Candle

 

A Piercing Candle is a two-candle pattern that typically appears in bearish trends and signals a potential reversal to the upside. Here are the key characteristics:

1. First Candle (Bearish):

• The first candle is a long bearish (red) candle.

• It continues the downward movement, indicating the prevailing downtrend.

2. Second Candle (Bullish):

• The second candle is a long bullish (green) candle.

• It opens below the low of the previous bearish candle but closes above the midpoint of the first bearish candle.

• This suggests strong buying pressure and a potential reversal of the downtrend.

3. Formation Context:

• The pattern appears at the bottom of a downtrend, indicating a possible trend reversal.

• The stronger the second bullish candle, the more significant the reversal signal.

4. Volume Consideration:

• Volume should ideally increase during the formation of the second candle, confirming the strength of the reversal.