Piercing Pattern
Candlestick PatternsA two-candle bullish reversal pattern where a green candle opens below the prior red candle's low and closes above its midpoint. It signals buying strength emerging in a downtrend.
What Is a Piercing Pattern?
The piercing pattern is a two-candle bullish reversal formation. The first candle is a red (bearish) candle in line with the existing Downtrend. The second candle opens below the first candle's low (or close, in forex) and then rallies to close above the midpoint of the first candle's body, effectively "piercing" into it.
Why It Matters
The pattern shows a dramatic intra-session reversal. On GBP/USD, if the price gaps lower at the open (common at the weekly open) but buyers push it back up to close above the midpoint of the prior session's range, it reveals significant demand at those lower prices.
The higher the second candle closes into the first candle's body, the stronger the signal. If it closes above the first candle's open entirely, the pattern becomes a Bullish Engulfing, which is even more powerful.
Entry and Stop
Enter long at the close of the second candle or on a break above its high. Place the stop below the low of the second candle. The nearest Resistance zone above makes a logical first target. This pattern works best on daily and weekly timeframes where the candles reflect genuine shifts in institutional sentiment.
Related Terms
Dark Cloud Cover
A two-candle bearish reversal pattern where a red candle opens above the prior green candle's high and closes below its midpoint. It warns of weakening bullish momentum.
Bullish Engulfing
A two-candle bullish reversal pattern where a large green candle completely engulfs the body of the preceding red candle. It signals strong buying momentum after a decline.
Morning Star
A three-candle bullish reversal pattern consisting of a large red candle, a small-bodied candle (often a doji), and a large green candle. It signals the end of a downtrend.
Hammer
A bullish reversal candlestick with a small body at the top and a long lower wick at least twice the body length. It appears at the bottom of a downtrend.