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- 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.