what is bullish piercing?
A bullish piercing candlestick pattern is one of the bullish reversal candlestick patterns. This pattern is formed of two candles. The accuracy of this pattern is high.
The bullish piercing candlestick pattern usually appears at the end of the downtrend. This pattern is probably seen at the support level and the trend is reversed after forming this pattern.
Two candlesticks are involved in this pattern. The first red candle indicates the trend continuation in a downtrend. The second green candle opens a gap down but closes above 50% of the body of the red candle.
When the price reaches the support level, some sellers think that it will break the support level and the market will go down so they start selling heavily and the price opens a gap down.
Now seeing the major support level, buyers enter the market and start pushing the price up. When the strength of the buyers is more than the sellers, then the candle closes above 50% of the body of the previous candle.
After seeing the bullish piercing pattern, sellers exit their position and fresh buyers enter and take the price higher.
How to trade a bullish piercing pattern?
To maximize the winning probability, we should trade this pattern at the pullback in an uptrend. When the price is trading above 200 EMA, it is considered that the trend is up.
It is recommended that, do not buy when the price is trading below 200 EMA. Now we have to find the short-term downtrend or pullback that comes up to the support level. If we see the bullish piercing candle pattern at this level, we should buy it.
1..The price should be trading above 200 EMA.
2. Wait for the price to come to the support level. The support level could be horizontal line support, trendline support, or dynamic support like 200 EMA or 50 EMA.
3. Wait for the piercing pattern to be formed. The green candle should open a gap-down. The closing of the green candle should be more than 50% of the red candle’s body.
4. Place a buy order above the high of the highest candle of the pair and place the stop loss below the low of the lowest candle.
5. Book the profit at the resistance level.
6. Here is the real chart example.
Important points to remember
- The price should be trading above 200 EMA.
- Wait for the price to come to the support level.
- Find the bullish piercing pattern at the support level.
- The second green candle should open a gapdown.
- The closing of the green candle should be more than 50% of the red candle’s body.
- Place a buy order above the high of the highest candle of the pair.
- Place the stop loss below the low of the lowest candle of the pair.
- Book the profit at the next resistance level.
FAQ – Bullish piercing candlestick pattern
Q1. What is bullish piercing?
Bullish piercing is a bullish reversal candlestick pattern formed of two candles. It appears at the end of the downtrend. In this pattern, the second green candle opens a gapdown but closes above 50% of the previous red candle’s body.
Q2. How to trade a bullish piercing pattern?
The valid bullish piercing pattern is formed at the major support level. You can place the buy entry above the high of the highest candle of the pair and place the stop loss below the low of the lowest candle of the pair. Profit can be booked at the next resistance level.
Q3. How accurate bullish piercing pattern is?
The accuracy depends on the average profitable trades taken using the bullish piercing candlestick pattern. It may vary a person to person but the overall accuracy is more than 60% on average.