Japanese candlesticks - Bullish piercing
Definition: A bullish piercing structure is comprised of two Japanese candlesticks. The first candlestick is a long bearish one (red) followed by a second large bullish candlestick (green). The opening of the second candlestick occurs on a bearish gap and it closes above the mid-point of the first candlestick’s body. This is the opposite of the dark cloud cover.
Characteristic: A bullish piercing structure often forms after a significant drop characterized by several large red Japanese candlesticks.
Significance: A bullish piercing is a reversal pattern, it indicates a bullish trend reversal. It reflects buyers’ desire to defend a price level.
Note: If the bullish piercing occurs on a high support level, it reinforces the pattern’s relevance.
Invalidation: If the next candlestick is not bullish or does not open on a bullish gap, the bullish piercing structure is invalidated.