Bullish Piercing Candlestick Pattern: Complete Guide


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Definition

The bullish-piercing pattern is a Bullish Trend Reversal Candlestick Pattern that consists of two candlesticks. The recent candlestick closes at 50% above the previous candlestick. This causes a price trend reversal, from bearish to bullish.

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How do you identify a pattern of piercing candlestick?

A piercing candlestick pattern is a simple pattern of candles that looks similar to a bullish pinbar but with a higher timeframe. A perfect strategy can give you profitable results when trading with it.

  1. The ratio body to wick of bearish candlesticks should not be less than 60%. Because it should indicate strong selling pressure.
  2. Bullish candlesticks should open below the low level of bearish candlesticks with a gap.
  3. Draw a horizontal line at the 50% level of the bearish candlestick. This will make sure that the bullish candlestick closes above the 50% mark and below the close for the bearish candlestick. This is an important step.

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The location of the candlestick pattern

The location of the candlestick pattern is crucial to achieving a higher winning percentage in a trading strategy. The candlestick pattern won’t work if it forms in a volatile market or a choppy market. We have narrowed down the locations where piercing candlesstick patterns can be used.

  • Support zone
  • Demand zone
  • Oversold level

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Bullish Piercing Pattern: Information Table

Features Explanation
Number of Candlesticks 2
Prediction Bullish trend reversal
Prior Trend Bearish trend
Counter Pattern Bearish Piercing Candlestick

What does a pattern of piercing tell traders about trading?

The bullish pattern of the bullish piercing indicates that buyers have become more powerful than sellers. The strong resistance level is the 50% level in bearish candlestick. The gap in this price chart indicates high volatility and imbalance.

A gap in the market after a big bearish candlestick means that many sellers sold out currency, leading to oversold conditions. The gap is then closed with a huge candlestick that closes above the 50% bearish candlestick level.

This signifies that buyers now control and are in control of market, and that sellers have been removed from the equation.

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This is why the piercing candlestick patterns are so popular.

Pro TipBefore choosing a trading strategy, traders must be familiar with the logic behind it. It is important to be able to read the price chart and understand the market.

How to trade Piercing pattern?

Because of its simplicity, bullish piercing candlestick patterns are easy to spot on candlestick charts. However, it can be difficult to trade one candlestick pattern without any other technical tools. That is why it is recommended that you trade the Piercing pattern using chart patterns or technical indicator.

Trading strategy for piercing candlestick patterns

This is a simple strategy that relies on the piercing pattern combined with a confluence within the support zone.

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Open a buy order

First, identify a support zone. Next, look for a piercing pattern of candles at the support zone. Although there is always a chance of trend reversal from strong support zones, the confluence candlestick patterns increase the likelihood of trend reversal.
After the formation of the support zone piercing pattern, open a buy trade.

Stop-loss level

Stop-loss should be placed below the support area. You can adjust the SL below candlestick patterns, but it is safer to place it below.

Profit Level

Close 75% trade at a 1:1 risk-reward. After that, you can break even the rest of the trade and let it continue until it reaches a 2:1 risk-reward.

Risk management

A piercing strategy for trading pattern trades should not exceed 2% of your total account balance. Your account size and the type of trading strategy will also impact risk management. Scalping is a strategy that involves trading more than 1%, while swing trading allows you to take on more.

Conclusion

A high probability candlestick pattern is the Piercing Candlestick Pattern. It represents a bullish pinbar pattern in a higher timeframe.
It is most effective in stocks because there is very little risk of gap in candlesticks due to the high trading volume.


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