The piercing pattern is just similar to the bullish engulfing pattern; only thing is that the 2nd candle in the two candlestick pattern does not close engulfing the body of the first candle.
Instead it closes crossing the halfway mark of the body of the first candle.
A confirmation comes when price crosses the high of the two candlestick patterns within next 2-3 candles.
On confirmation one may take a buy trade with stop loss below the low of the candle.
A piercing pattern is a two-day, candlestick price pattern that marks a potential short-term reversal from a downward trend to an upward trend.
The pattern includes the first day opening near the high and closing near the low with an average or larger-sized trading range.
It also includes a gap down after the first day where the second day begins trading, opening near the low and closing near the high.
The close should also be a candlestick that covers at least half of the upward length of the previous day’s red candlestick body.
