Japanese candlesticks - Piercing line

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Piercing line

Definition: A piercing line structure is comprised of two Japanese candlesticks. The first is a large bearish candlestick (red) followed by a large bullish candlestick (green). The second candlestick opens in a bearish gap and its closing occurs on or above the mid-point of the first candlestick.


Piercing line
Characteristic: A piercing line structure often forms after a significant drop characterized by several large red Japanese candlesticks.

Significance: A piercing line is a reversal pattern, it indicates a reversal in the bullish trend. This reflects exhaustion of selling power and a gradual takeover by the buyers.

Note: The higher the second candlestick closes above the midpoint of the first candlestick, the more reliable the piercing line structure is.

Invalidation: If the next candlestick is not bullish, the piercing line structure is invalidated.

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