Piercing Line candlesticks - powerful trading analysis

 

Piercing Line candlesticks pattern

Hello traders,  welcome to tradersgrip . Today I will discuss  in detail about the Bullish Piercing Line candlestick pattern. This is a highly reliable Reversal bullish candlesticks pattern. It means now the bearishness in the market is over and the uptrend is about to begin.

Technical analysis of Bullish Piercing Line candlestick  

Formation

* The Bullish Piercing Line candlesticks pattern consists of two candles. The first candle is  Long Bearish or Marubozu  . It is of red colour.

* The second candle is  Long bullish  or Marubozu candlestick . It is of green colour.

* The second candle should open below the low price of first candle  . ie. The second candle  open gapped down the first candle .

* Second candle should close between open  price and middle price of first candle.

* The high of the first candle is  high of this pattern. And low of second candle is called low of  this pattern.

Where is Piercing Line candle formed ?

formation of piercing line candle

* It is always formed after a long downtrend  in the chart. It is formed at the Bottom of the chart. After the formation of this pattern, the possibility of bearishness in the market ends. Buying after getting the confirmation will definitely be beneficial.

* It forms  in every type of market  such as Indian stock market, commodity market, foreign market etc.

* It appears in intraday charts, daily charts, weekly charts and monthly charts. In daily  charts  it works very well.

Where to use it ?

* If you are trading in intraday then watch it in 5 minute ,15 minute and hourly time frame. But it gives good result in hourly time period.

* If you do positional trading then see it in daily chart and monthly chart.

How to use it?

How to use piercing line

* Suppose this pattern is formed in the chart. If the new candle is opened gap-up from this pattern then you have to buy in the market.

* Buy only if the new candle closes above the high of this pattern. This is very necessary.

* Volume of second candle must be higher than that of first candle. It indicate that signal is more powerful.

* The stop-loss is to be placed below the low price of this pattern.

Let us understand this in the chart.

piercing line in chart

* The Bullish Piercing Line  pattern in this chart is formed after a long downtrend and the volume of the second candle is more than that of the first candle of this pattern.

* Buy when the new candle closes above the high of this pattern.

* The  new candle in this chart has closed above this pattern. This is the right time to trade.

* Put a stop-loss at the bottom of this pattern.

When to book profit?

* Until a trend changing signal is received.

important Point

* In Piercing Line candlestick pattern open price of second  candle should lie below low price of first  candle .

* After the formation of this pattern, one should not buy until the market price crosses its high.

* Volume of second candle must be higher than that of first candle.