Piercing Line
- Type: Reversal
- Relevance: Bullish
- Prior Trend: Bearish
- Reliability: High
- # of Sticks: 2
Definition:
This is also a two-candle reversal pattern where first you see a wide range candle that closes near the bottom of the range. The sellers are in control. Then you see a wide range candle that has to close at least halfway into the prior candle. Those that shorted the stock on first candle are now sitting at a loss on the rally that happens on the second candle. This can set up a powerful reversal.