The Piercing Pattern is a two candlestick pattern that occur after a significant downtrend, and signals a potential reversal to an uptrend.
The first candlestick is a bearish candlestick, indicating continued selling pressure.
The second candlestick is a bullish candlestick that opens with a gap down below the previous day's low but closes more than halfway into the body of the previous day's bearish candlestick.
(Fig 1.4 - Piercing Pattern and Dark Cloud Cover)
Piercing Pattern suggests that the buyers have found value at the price level that opens with a gap down after a sustained downtrend, indicating a potential reversal from a downtrend to an uptrend.
The pattern becomes more significant when it forms near support levels or after a prolonged downtrend.
Vice versa for Dark Cloud Cover pattern as mentioned above.
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