An Introduction to Piercing Pattern

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Welcome friends and how are you doing? Today we will be talking about the piercing pattern which is an interesting pattern to know about in the chart. Understanding how the chart works is very important as knowing the different types of chart patterns can be a stepping stone for you to actualize your goal.

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Piercing Pattern

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Like every other chart pattern that is used in conducting technical analysis of crypto, the forex market, and the financial markets as a whole, are the same way the piercing pattern is used.

Now, having said that piercing pattern is mostly for inducting a potential bullish reversal, which means the price of an asset can start rising immediately after a downward trend. Simply put, the piercing pattern appears after a price decline and shows you a rejection of the lower prices of the asset.

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How the piercing pattern works

First candle:
The piercing pattern starts with a long bearish candlestick telling you that the prices of the asset you are analyzing have been declining. This candlestick is a candle that is colored in red.

Second Candlestick
The second candlestick is the bullish candle color in green which is the candle that opens below the close of that of the first bearish candlestick which is an indication of continued downward movement, but rises rapidly to close halfway up the body of the first bearish candlestick.

However, most time it is difficult to identify this pattern when the trading volume of the asset you are analyzing is low, but when the trading volume is high, it is easy to identify.

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Identification of the piercing pattern

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For you to identify the piecing pattern you just need to look for where there are both bearish and bullish candlesticks. To this

• Bearish candle is the first candle.

• Bullish candle is the second candle.

• The second candle opened must be below the first candle.

• The close of the second candle must be 50% level above the body of the first candle.

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Importance

There are a lot of reasons why the piercing pattern is important some of these reasons are:

• The piercing pattern helps traders to know when the selling pressure is losing strength and buying pressure is increasing, indicating a possible upward price reversal.

• As a trader, you can use the piercing pattern to decide when you are to enter long or short positions.

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Disclaimer

_{Piercing pattern is what we have discussed in this post, which is an interesting pattern that you need to know about. Please note that this post isn't investment advice, but serves as educational content.}

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