A 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 a short position. A piercing pattern is formed when both bulls and bears are fighting for control over prices. The piercing pattern is made up of two candlesticks, the first one is bearish and the second one is bullish candlestick.
👉 The Piercing Pattern is a bullish reversal candlestick pattern that appears at the end of a downtrend, signaling a reversal in the uptrend. Traders can expect to enter long positions or close short positions based on this pattern.
This pattern is formed by only two candles 👇👇
1. The first candle is a large bearish (red) candle, indicating the ongoing strength of the downtrend.
2. The second candle is a bullish (green) candle that opens significantly below the previous day's close, but moves sharply higher under buyer pressure, closing at least 50% above the first candle's body.
👉🏻 The significance of this pattern is that it signals the return of buyers to the market. Selling pressure persists on the first day, but buyers become active on the second day, pushing prices higher and signaling an uptrend. Therefore, it is considered a strong reversal indicator, although confirmation from subsequent candles is necessary.
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