{"id":42405,"date":"2023-05-23T19:53:23","date_gmt":"2023-05-23T14:23:23","guid":{"rendered":"https://www.5paisa.com/finschool/?p=42405"},"modified":"2024-08-12T20:09:57","modified_gmt":"2024-08-12T14:39:57","slug":"piercing-pattern","status":"publish","type":"post","link":"https://www.5paisa.com/finschool/piercing-pattern/","title":{"rendered":"Piercing Pattern: Meaning, Formation \u0026#038; Trading Setup"},"content":{"rendered":"\u003cdiv data-elementor-type=\u0022wp-post\u0022 data-elementor-id=\u002242405\u0022 class=\u0022elementor elementor-42405\u0022\u003e\u003csection class=\u0022elementor-section elementor-top-section elementor-element elementor-element-993586f elementor-section-boxed elementor-section-height-default elementor-section-height-default\u0022 data-id=\u0022993586f\u0022 data-element_type=\u0022section\u0022\u003e\u003cdiv class=\u0022elementor-container elementor-column-gap-default\u0022\u003e\u003cdiv class=\u0022elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-09a8c58\u0022 data-id=\u002209a8c58\u0022 data-element_type=\u0022column\u0022\u003e\u003cdiv class=\u0022elementor-widget-wrap elementor-element-populated\u0022\u003e\u003cdiv class=\u0022elementor-element elementor-element-a7ab6e6 elementor-widget elementor-widget-text-editor\u0022 data-id=\u0022a7ab6e6\u0022 data-element_type=\u0022widget\u0022 data-widget_type=\u0022text-editor.default\u0022\u003e\u003cdiv class=\u0022elementor-widget-container\u0022\u003e\u003ch2\u003e\u003cstrong\u003eપિયરિંગ પૅટર્ન શું છે?\u003c/strong\u003e\u003c/h2\u003e\u003cp\u003e\u003ca href=\u0022https://www.5paisa.com/gujarati/finschool/wp-content/uploads/2023/05/5-1.svg\u0022\u003e\u003cimg fetchpriority=\u0022high\u0022 decoding=\u0022async\u0022 class=\u0022aligncenter wp-image-42412 size-full\u0022 role=\u0022img\u0022 src=\u0022https://www.5paisa.com/gujarati/finschool/wp-content/uploads/2023/05/5-1.svg\u0022 alt=\u0022\u0022 width=\u00221004\u0022 height=\u0022855\u0022 /\u003e\u003c/a\u003e\u003c/p\u003e\u003cul\u003e\u003cli\u003ePiercing Pattern is a bullish reversal pattern that can be found at the end of a downtrend. This \u003ca href=\u0022https://www.5paisa.com/gujarati/finschool/course/technical-analysis-course/candlestick-patterns/#Seven-Bullish-Candlestick-Patterns\u0022\u003ecandlestick pattern\u003c/a\u003e is used as an indicator to enter a long position or exit the sell position. This type of pattern is formed when the bulls and bears both fight to gain control over the prices.\u003c/li\u003e\u003cli\u003eThe piercing pattern is made up of two candlesticks. The first candlestick should be red candlestick having a large real body and the second candlestick should be green in colour and should be below the low of the previous candlestick.\u003c/li\u003e\u003c/ul\u003e\u003ch2\u003e\u003cstrong\u003eHow a Piercing Pattern Works \u003c/strong\u003e\u003c/h2\u003e\u003cul\u003e\u003cli\u003eA piercing forms when a security opens at a lower price than its previous close and immediately rebounds to make an intraday high and then closes at or above its opening price. The purpose of creating an outside reversal signal is to exploit divergence between two oscillators. The piercing line candlestick pattern is just one of many reversal signals that fall in to that category.\u003c/li\u003e\u003cli\u003eThis pattern offers confirmation signals of reversals whenever the stock price has been pierced from below the opening price and closing price at a higher level than its opening price. These patterns are not common and are rarely formed. \u003c/li\u003e\u003cli\u003eTherefore you should not be over reliant on this pattern. These patterns are rare and so they can give misleading signals. This is the reason why they are not popular among intraday traders. These patterns reliability might increase if the conviction from one more indicator can be drawn.\u003c/li\u003e\u003c/ul\u003e\u003ch2\u003e\u003cstrong\u003ePiercing Pattern Formation\u003c/strong\u003e\u003c/h2\u003e\u003cul\u003e\u003cli\u003eThe formation timeline of this pattern is two days. The first candle in this pattern is influenced or dominated by sellers, whereas buyers dominate the second candle. The preceding candle of this pattern indicates a downward trend in the asset’s price. Under this pattern, you can see that the supply of shares meant for selling has reached its upper ceiling. The second candle of this pattern starts with a small gap.\u003c/li\u003e\u003cli\u003eGaps can only be formed if a security’s opening price is higher or lower on the second day compared to the previous day’s closing price. The second candle crosses at a value nearer to the opening price of the first day. In order to have a clear piercing line pattern, the second green candle shall cover at least half of the last day’s red candlestick.\u003c/li\u003e\u003c/ul\u003e\u003ch2\u003e\u003cstrong\u003ePiercing Pattern Example\u003c/strong\u003e\u003c/h2\u003e\u003cp\u003e\u003ca href=\u0022https://www.5paisa.com/gujarati/finschool/wp-content/uploads/2023/05/4-1.svg\u0022\u003e\u003cimg decoding=\u0022async\u0022 class=\u0022aligncenter wp-image-42411 size-full\u0022 role=\u0022img\u0022 src=\u0022https://www.5paisa.com/gujarati/finschool/wp-content/uploads/2023/05/4-1.svg\u0022 alt=\u0022\u0022 width=\u00221004\u0022 height=\u0022855\u0022 /\u003e\u003c/a\u003e\u003c/p\u003e\u003cul\u003e\u003cli style=\u0022text-align: justify; background: white;\u0022\u003e\u003cspan style=\u0022font-size: 14.0pt; font-family: \u0027Lato\u0027,serif; color: black;\u0022\u003eThis is a daily chart of Sun Pharmaceuticals Industries Limited. The chart shows us that SUN was under a long bearish trend. At the end of the bearish trend, there is a large red bearish candlestick followed by a large green candle. \u003c/span\u003e\u003c/li\u003e\u003cli style=\u0022text-align: justify; background: white;\u0022\u003e\u003cspan style=\u0022font-size: 14.0pt; font-family: \u0027Lato\u0027,serif; color: black;\u0022\u003eLet us consider that the red candle is P1 and the green candle is P2. The P2 candle started with a gap down open and then went further below, showing the strength of the bears still active in the trade. The P2 candle closed above the midpoint of the P1 candle. This move started the bullish reversal trend. After P2, the bullish trend continued.\u003c/span\u003e\u003c/li\u003e\u003cli style=\u0022text-align: justify; background: white;\u0022\u003eA trader will enter the stock on the third day above the closing price of P2. The stop loss would be just below the low of P1. When the uptrend starts, the trader can continue to hold the stock bought on day three, till the stop loss is triggered. Or continue holding the stock with a trailing stop loss. Else the trader remains on the stock till another downtrend occurs.\u003c/li\u003e\u003c/ul\u003e\u003ch2 style=\u0022text-align: justify; background: white; margin: 24.0pt 0cm 24.0pt 0cm;\u0022\u003e\u003cstrong\u003eHow to use Piercing Pattern? \u003c/strong\u003e\u003c/h2\u003e\u003cul\u003e\u003cli style=\u0022text-align: justify; background: white;\u0022\u003eThe piercing line pattern signals an overall bullish reversal trend in markets or related stocks. However the trader should be very cautious while using them for trading as it can give misleading signals. In piercing pattern the trader can visually see the second candle covers about half of the first candle for forming a piercing shape.\u003c/li\u003e\u003cli style=\u0022text-align: justify; background: white;\u0022\u003eThe red candle may not get covered in its entirety, implying that the bulls could not control the market completely and reverse complete losses of the first day.\u003c/li\u003e\u003c/ul\u003e\u003ch2\u003e\u003cstrong\u003eIdeal Trading setup for Piercing Pattern\u003c/strong\u003e\u003c/h2\u003e\u003cul\u003e\u003cli\u003e\u003cstrong\u003e \u003c/strong\u003eWhen the trader observes a piercing candlestick chart pattern he should wait until the high of the first candlestick is succeed by the previous bearish candle. This is an ideal trade setup when trading with the piercing candlestick pattern. \u003c/li\u003e\u003cli\u003eThe stop loss should low of the previous bearish candle. Piercing pattern is more suitable for day and swing traders as the rate of success are quite high in longer time frames.\u003c/li\u003e\u003c/ul\u003e\u003ch2\u003e\u003cstrong\u003eનિષ્કર્ષ\u003c/strong\u003e\u003c/h2\u003e\u003cp\u003eThus piercing pattern is made of two candlesticks the first one is bearish and the second one is bullish candlestick. પિયરિંગ પૅટર્ન એક બુલિશ રિવર્સલ પૅટર્ન છે જે ડાઉનટ્રેન્ડના અંતે મળી શકે છે. It is found towards the end of a downtrend and is quite similar to the dark cloud ever. Investors must look at a few characteristics when they trade with this pattern and not forget to confirm the signals given by this pattern with other technical indicators.\u003c/p\u003e\u003c/div\u003e\u003c/div\u003e\u003c/div\u003e\u003c/div\u003e\u003c/div\u003e\u003c/section\u003e\u003csection class=\u0022elementor-section elementor-top-section elementor-element elementor-element-de52164 elementor-section-boxed elementor-section-height-default elementor-section-height-default\u0022 data-id=\u0022de52164\u0022 data-element_type=\u0022section\u0022\u003e\u003cdiv class=\u0022elementor-container elementor-column-gap-default\u0022\u003e\u003cdiv class=\u0022elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-3a079cd\u0022 data-id=\u00223a079cd\u0022 data-element_type=\u0022column\u0022\u003e\u003cdiv class=\u0022elementor-widget-wrap elementor-element-populated\u0022\u003e\u003cdiv class=\u0022elementor-element elementor-element-8a15004 elementor-widget elementor-widget-heading\u0022 data-id=\u00228a15004\u0022 data-element_type=\u0022widget\u0022 data-widget_type=\u0022heading.default\u0022\u003e\u003cdiv class=\u0022elementor-widget-container\u0022\u003e\u003ch2 class=\u0022elementor-heading-title elementor-size-default\u0022\u003eવારંવાર પૂછાતા પ્રશ્નો (FAQ): -\u003c/h2\u003e\u003c/div\u003e\u003c/div\u003e\u003c/div\u003e\u003c/div\u003e\u003c/div\u003e\u003c/section\u003e\u003csection class=\u0022elementor-section elementor-top-section elementor-element elementor-element-7daf4eb elementor-section-boxed elementor-section-height-default elementor-section-height-default\u0022 data-id=\u00227daf4eb\u0022 data-element_type=\u0022section\u0022\u003e\u003cdiv class=\u0022elementor-container elementor-column-gap-default\u0022\u003e\u003cdiv class=\u0022elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-9b178cd\u0022 data-id=\u00229b178cd\u0022 data-element_type=\u0022column\u0022\u003e\u003cdiv class=\u0022elementor-widget-wrap elementor-element-populated\u0022\u003e\u003cdiv class=\u0022elementor-element elementor-element-1652722 elementor-widget elementor-widget-accordion\u0022 data-id=\u00221652722\u0022 data-element_type=\u0022widget\u0022 data-widget_type=\u0022accordion.default\u0022\u003e\u003cdiv class=\u0022elementor-widget-container\u0022\u003e\u003cdiv class=\u0022elementor-accordion\u0022\u003e\u003cdiv class=\u0022elementor-accordion-item\u0022\u003e\u003cdiv id=\u0022elementor-tab-title-2341\u0022 class=\u0022elementor-tab-title\u0022 data-tab=\u00221\u0022 role=\u0022button\u0022 aria-controls=\u0022elementor-tab-content-2341\u0022 aria-expanded=\u0022false\u0022\u003e\u003cspan class=\u0022elementor-accordion-icon elementor-accordion-icon-left\u0022 aria-hidden=\u0022true\u0022\u003e\u003cspan class=\u0022elementor-accordion-icon-closed\u0022\u003e\u003ci class=\u0022fas fa-plus\u0022\u003e\u003c/i\u003e\u003c/span\u003e\u003cspan class=\u0022elementor-accordion-icon-opened\u0022\u003e\u003ci class=\u0022fas fa-minus\u0022\u003e\u003c/i\u003e\u003c/span\u003e\u003c/span\u003e\u003ca class=\u0022elementor-accordion-title\u0022 tabindex=\u00220\u0022\u003eHow is a piercing pattern formed?\u003c/a\u003e\u003c/div\u003e\u003cdiv id=\u0022elementor-tab-content-2341\u0022 class=\u0022elementor-tab-content elementor-clearfix\u0022 data-tab=\u00221\u0022 role=\u0022region\u0022 aria-labelledby=\u0022elementor-tab-title-2341\u0022\u003e\u003cp\u003eA piercing pattern is formed in candlestick charts when a bearish candle is followed by a bullish candle that opens below the previous close and closes above the midpoint of the bearish candle. It suggests a potential reversal of a downtrend.\u003c/p\u003e\u003c/div\u003e\u003c/div\u003e\u003cdiv class=\u0022elementor-accordion-item\u0022\u003e\u003cdiv id=\u0022elementor-tab-title-2342\u0022 class=\u0022elementor-tab-title\u0022 data-tab=\u00222\u0022 role=\u0022button\u0022 aria-controls=\u0022elementor-tab-content-2342\u0022 aria-expanded=\u0022false\u0022\u003e\u003cspan class=\u0022elementor-accordion-icon elementor-accordion-icon-left\u0022 aria-hidden=\u0022true\u0022\u003e\u003cspan class=\u0022elementor-accordion-icon-closed\u0022\u003e\u003ci class=\u0022fas fa-plus\u0022\u003e\u003c/i\u003e\u003c/span\u003e\u003cspan class=\u0022elementor-accordion-icon-opened\u0022\u003e\u003ci class=\u0022fas fa-minus\u0022\u003e\u003c/i\u003e\u003c/span\u003e\u003c/span\u003e\u003ca class=\u0022elementor-accordion-title\u0022 tabindex=\u00220\u0022\u003eWhat are the characteristics of a piercing pattern?\u003c/a\u003e\u003c/div\u003e\u003cdiv id=\u0022elementor-tab-content-2342\u0022 class=\u0022elementor-tab-content elementor-clearfix\u0022 data-tab=\u00222\u0022 role=\u0022region\u0022 aria-labelledby=\u0022elementor-tab-title-2342\u0022\u003e\u003cp\u003eCharacteristics of a piercing pattern include a bearish candle followed by a bullish candle, the second candle opening below the previous close, the second candle closing above the midpoint of the first candle, and a potential shift in market sentiment.\u003c/p\u003e\u003c/div\u003e\u003c/div\u003e\u003cdiv class=\u0022elementor-accordion-item\u0022\u003e\u003cdiv id=\u0022elementor-tab-title-2343\u0022 class=\u0022elementor-tab-title\u0022 data-tab=\u00223\u0022 role=\u0022button\u0022 aria-controls=\u0022elementor-tab-content-2343\u0022 aria-expanded=\u0022false\u0022\u003e\u003cspan class=\u0022elementor-accordion-icon elementor-accordion-icon-left\u0022 aria-hidden=\u0022true\u0022\u003e\u003cspan class=\u0022elementor-accordion-icon-closed\u0022\u003e\u003ci class=\u0022fas fa-plus\u0022\u003e\u003c/i\u003e\u003c/span\u003e\u003cspan class=\u0022elementor-accordion-icon-opened\u0022\u003e\u003ci class=\u0022fas fa-minus\u0022\u003e\u003c/i\u003e\u003c/span\u003e\u003c/span\u003e\u003ca class=\u0022elementor-accordion-title\u0022 tabindex=\u00220\u0022\u003eWhat is the target price for a piercing pattern?\u003c/a\u003e\u003c/div\u003e\u003cdiv id=\u0022elementor-tab-content-2343\u0022 class=\u0022elementor-tab-content elementor-clearfix\u0022 data-tab=\u00223\u0022 role=\u0022region\u0022 aria-labelledby=\u0022elementor-tab-title-2343\u0022\u003e\u003cp\u003eThe target price for a piercing pattern is typically the nearest resistance level or a previous support level that the price may retest as it potentially reverses its downward movement.\u003c/p\u003e\u003c/div\u003e\u003c/div\u003e\u003cdiv class=\u0022elementor-accordion-item\u0022\u003e\u003cdiv id=\u0022elementor-tab-title-2344\u0022 class=\u0022elementor-tab-title\u0022 data-tab=\u00224\u0022 role=\u0022button\u0022 aria-controls=\u0022elementor-tab-content-2344\u0022 aria-expanded=\u0022false\u0022\u003e\u003cspan class=\u0022elementor-accordion-icon elementor-accordion-icon-left\u0022 aria-hidden=\u0022true\u0022\u003e\u003cspan class=\u0022elementor-accordion-icon-closed\u0022\u003e\u003ci class=\u0022fas fa-plus\u0022\u003e\u003c/i\u003e\u003c/span\u003e\u003cspan class=\u0022elementor-accordion-icon-opened\u0022\u003e\u003ci class=\u0022fas fa-minus\u0022\u003e\u003c/i\u003e\u003c/span\u003e\u003c/span\u003e\u003ca class=\u0022elementor-accordion-title\u0022 tabindex=\u00220\u0022\u003eCan a piercing pattern indicate a trend reversal?\u003c/a\u003e\u003c/div\u003e\u003cdiv id=\u0022elementor-tab-content-2344\u0022 class=\u0022elementor-tab-content elementor-clearfix\u0022 data-tab=\u00224\u0022 role=\u0022region\u0022 aria-labelledby=\u0022elementor-tab-title-2344\u0022\u003e\u003cp\u003eYes, a piercing pattern can indicate a potential trend reversal from a bearish to a bullish trend. It suggests that buying pressure has entered the market and may lead to a shift in price direction.\u003c/p\u003e\u003c/div\u003e\u003c/div\u003e\u003cdiv class=\u0022elementor-accordion-item\u0022\u003e\u003cdiv id=\u0022elementor-tab-title-2345\u0022 class=\u0022elementor-tab-title\u0022 data-tab=\u00225\u0022 role=\u0022button\u0022 aria-controls=\u0022elementor-tab-content-2345\u0022 aria-expanded=\u0022false\u0022\u003e\u003cspan class=\u0022elementor-accordion-icon elementor-accordion-icon-left\u0022 aria-hidden=\u0022true\u0022\u003e\u003cspan class=\u0022elementor-accordion-icon-closed\u0022\u003e\u003ci class=\u0022fas fa-plus\u0022\u003e\u003c/i\u003e\u003c/span\u003e\u003cspan class=\u0022elementor-accordion-icon-opened\u0022\u003e\u003ci class=\u0022fas fa-minus\u0022\u003e\u003c/i\u003e\u003c/span\u003e\u003c/span\u003e\u003ca class=\u0022elementor-accordion-title\u0022 tabindex=\u00220\u0022\u003eHow is the confirmation of a piercing pattern achieved?\u003c/a\u003e\u003c/div\u003e\u003cdiv id=\u0022elementor-tab-content-2345\u0022 class=\u0022elementor-tab-content elementor-clearfix\u0022 data-tab=\u00225\u0022 role=\u0022region\u0022 aria-labelledby=\u0022elementor-tab-title-2345\u0022\u003e\u003cp\u003eConfirmation of a piercing pattern is achieved by assessing other technical indicators or price action signals, such as an increase in trading volume, support from trendlines or moving averages, or the occurrence of other bullish patterns. Confirmation helps validate the potential reversal signaled by the piercing pattern.\u003c/p\u003e\u003c/div\u003e\u003c/div\u003e\u003c/div\u003e\u003c/div\u003e\u003c/div\u003e\u003c/div\u003e\u003c/div\u003e\u003c/div\u003e\u003c/section\u003e\u003c/div\u003e","protected":false},"excerpt":{"rendered":"\u003cp\u003eWhat Is a Piercing Pattern? Piercing Pattern is a bullish reversal pattern that can be found at the end of a downtrend. This candlestick pattern is used as an indicator to enter a long position or exit the sell position. This type of pattern is formed when the bulls and bears both fight to gain … \u003ca title=\u0022Piercing Pattern: Meaning, Formation \u0026#038; Trading Setup\u0022 class=\u0022read-more\u0022 href=\u0022https://www.5paisa.com/gujarati/finschool/piercing-pattern/\u0022 aria-label=\u0022Read more about Piercing Pattern: Meaning, Formation \u0026#038; Trading Setup\u0022\u003eRead more\u003c/a\u003e\u003c/p\u003e","protected":false},"author":1,"featured_media":42407,"comment_status":"બંધ છે","ping_status":"ખોલો","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[18,180],"tags":[],"class_list":["post-42405","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blogs","category-trading-chart-patterns"],"acf":[],"_links":{"self":[{"href":"https://www.5paisa.com/finschool/wp-json/wp/v2/posts/42405","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https://www.5paisa.com/finschool/wp-json/wp/v2/posts"}],"about":[{"href":"https://www.5paisa.com/finschool/wp-json/wp/v2/types/post"}],"author":[{"embeddable":true,"href":"https://www.5paisa.com/finschool/wp-json/wp/v2/users/1"}],"replies":[{"embeddable":true,"href":"https://www.5paisa.com/finschool/wp-json/wp/v2/comments?post=42405"}],"version-history":[{"count":31,"href":"https://www.5paisa.com/finschool/wp-json/wp/v2/posts/42405/revisions"}],"predecessor-version":[{"id":59982,"href":"https://www.5paisa.com/finschool/wp-json/wp/v2/posts/42405/revisions/59982"}],"wp:featuredmedia":[{"embeddable":true,"href":"https://www.5paisa.com/finschool/wp-json/wp/v2/media/42407"}],"wp:attachment":[{"href":"https://www.5paisa.com/finschool/wp-json/wp/v2/media?parent=42405"}],"wp:term":[{"taxonomy":"શ્રેણી","embeddable":true,"href":"https://www.5paisa.com/finschool/wp-json/wp/v2/categories?post=42405"},{"taxonomy":"પોસ્ટ_ટૅગ","embeddable":true,"href":"https://www.5paisa.com/finschool/wp-json/wp/v2/tags?post=42405"}],"curies":[{"name":"wp","href":"https://api.w.org/{rel}","templated":true}]}}