Piercing pattern
Also known as: piercing line
The piercing pattern is a two-candle bullish reversal pattern that can appear after a decline, suggesting that selling pressure is fading and buyers may be stepping back in. It is essentially the mirror image of , which signals the opposite, a bearish reversal after an advance.
The pattern begins with a long red or dark candle that continues the existing , confirming sellers are still firmly in control. The next candle opens lower still, often gapping below the prior close, which at first looks like more of the same selling. But buyers then push the price back up through the session, and the candle closes above the midpoint of the previous candle's body, though not high enough to fully close above where the prior candle opened. That strong recovery from a weak open is what gives the pattern its name, the second candle appears to "pierce" back up into the body of the first.
The deeper the second candle closes into the body of the first, the more convincing the reversal signal is generally considered to be, with a close very close to the top of the prior candle's range viewed as a stronger version of the pattern. As with other candlestick reversal signals, traders typically want to see the piercing pattern occur after a clear, sustained rather than in a , and often look for confirmation from rising volume or a subsequent up day before treating it as a reliable turning point.