Piercing line candlestick pattern
The piercing line candlestick pattern is a bullish reversal pattern that can be a great benefit when trying to determine the end of a bearish pullback.
This pattern consists of two different days. The first day is a bearish one. Here the bears take control and push the stock farther and farther down. The second day the stock continues and opens up at a lower level.
This time however the stock rallies and closes above the middle of the last bearish candlestick.
Why does it need to close above the middle? Many swing traders consider the middle of a candlestick to be resistance. If it breaks that level you may get added pressure from swing traders who are covering their short positions.
Below is an example of how a piercing line candlestick pattern looks like
Tip If this pattern does not close above the middle of the candlestick it may not be a bearish indicator at all but a small pullback. Other Candlestick Patterns There are a lot of other candlestick patterns which traders will use to tell where a stock is likely to move in the short term. Here are a few other patterns. Evening Star - A 1 day reversal pattern. Falling Three Method - A Bearish Pattern Unique Three River Bottom – A Bullish Reversal Pattern
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