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The dark cloud cover and piercing candles are like bookends (refer to Figure 1).
Criteria of the «piercing pattern»:
- The Piercing Pattern is composed of a two-candle formation in a downtrending market.
- The body of the first candle is black; the body of the second candle is white and long.
- The second day opens considerably lower than the trading of the prior day and the white candle closes more than halfway up the black candle.
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Figure 1. Example of the pattern
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Signal Enhancements:
- The higher the white candle closes into the black candle, the stronger the reversal.
- If the second candle of the pattern opens below an important support level but then the price closes above this level it means the bears can’t control the market and there is a high probability that a bottom will form.
- If the second bar is accompanied by a larger trade volume than the first bar it indicates the downtrend has spent its force.
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+7 (495) 710-76-76
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© 1998—2008 «Alpari» |
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