Bullish Piercing Candlestick Pattern

The bullish piercing candle pattern is a bullish reversal candlestick pattern that often appear at the end of a downtrend or correction. This pattern appears quite often in stocks and traders can take trades based on just the candle pattern. If this candle pattern appears at price support or important moving averages such as the 50 MA or the 200 MA, it can be a very powerful reversal signal.

bullish piercing pattern

The picture above shows the construction of this pattern. There will be a bearish candle followed by a candle that gaps open lower but closes at least 50% into the body of the previous candle. The bullish candle does not close above the highs of the previous red bar. Otherwise it will be called a bullish engulfing pattern instead of a bullish piercing pattern.

It is important to note the psychology behind this pattern. As the stock moves downward, the bearish sentiment is extremely strong. Then the stock gaps down and this immediately bring in more bears. However, by the end of the day, the stock not only recover from the gap down, it actually closed higher well into the body of the previous red bar. This tells us a strong picture that the bears were not in control and the bulls are starting to come into the picture.

The chart above shows DISCK having a correction from mid December to January. As the stock fell and reach the 200 MA support, it formed a bullish piercing pattern. When you see this pattern happen at the 200 MA, pay attention. The stock may be trying to tell you that it is bottoming. True enough, the stock halted the downfall and rose for a week or two. Combining candlestick patterns with other technical analysis is indeed a very powerful and potent signal for trading.

The stock chart of DLTR above shows another example of how the bullish piercing pattern can tell us of a short term bottom. The stock was actually trying to breakdown but the breakdown failed and a bullish piercing pattern formed at support. This immediately told traders that the breakdown will not follow through and a short term bottom in the stock formed.

Estee Lauder was trying to form a bottom in its daily stock chart. As it tried to make a new uptrend, the stock formed an uptrendline and it corrected to the uptrendline support. A bullish piercing pattern formed at the trendline support and this hinted to traders that this stock has successfully bottomed. Look how the stock rose and started a nice new uptrend.

Finally, when you see a stock forming a bullish piercing pattern while it is also forming a chart pattern, take note. EMN was in the process of forming a double bottom. A bullish piercing pattern appeared at the second bottom and this gave a powerful hint that this stock is forming a short term bottom. Some traders do take a trade when these kind of patterns form. So the next time a bullish piercing candlestick pattern appears alongside a chart pattern, always be ready to hit the buy button for a short term trade.

  • If you like this article, consider starting the Stock Market Course. It is free and jam packed with great information for newbies.
  • Want to have updates on the financial markets? Join my Telegram Channel. Dstockmarket.com Channel.
  • Help support this page and press the Facebook Like button below. Thanks!

Recent Articles

  1. Dow Jumps Higher After Trade War Pause, Will Markets Go Even Higher?

    Dec 03, 18 08:16 AM

    With an agreement to pause the trade war, Dow is about to jump 450 points higher, but will this rally sustain and go even higher? Lets take a look at the charts.

    Read More

  2. Bull Run To Year End In US Market? It All Depends On This...

    Nov 29, 18 07:51 AM

    Yesterday we saw a huge big rally 600 ++ points. The question now is this rally sustainable and will we have a beautiful Christmas in the stock market this year. Here are a few things to look out for…

    Read More

  3. Technical Analysis Of KLCI 29 November 2018

    Nov 29, 18 07:35 AM

    This sideways movement in the KLCI is really giving investors and traders a headache. What we are experiencing now is a volatility contraction which is often followed by volatility expansion.

    Read More

  4. Nasdaq Tries To Bottom But Still Faces Selling Pressure Nov 26 2018

    Nov 26, 18 08:52 AM

    As the techs reach an area of long term support, its going to be a choppy ride as the market decides whether support will hold or the downtrend continues...

    Read More

  5. Stock Market Analysis October 30 2018

    Oct 30, 18 06:35 AM

    As we close out the month of October 2018, what is in store for us? Let us take a look at the charts and see what they might be telling us.

    Read More

New! Comments

Have your say about what you just read! Leave me a comment in the box below.