Piercing Candlestick ~ Reversal Candlestick Signal

We have already gone through Dark Cloud Cover Candlestick Signal; which is reversal candlestick and sometime it gives cautious approach prior to reversal of trend. 

Now today lets have look at Piercing Candlestick Signal. 

This candlestick formation is Trend Reversal from Bearish to Bullish Trend and it is 2 candlesticks signal pattern. 

Lets have look at different charts and try to understand Piercing candlestick signal first.

Now lets understand this step by step.

Day 1 or Candlestick or Trend

Underlying trend must be downtrend or candle must have closed in red or significant lower than opening levels or in other words current candle should be in negative wrt to previous close. 

Day 2 Piercing Candlestick 

Opening must be lower than previous close and current candle close must be above half way mark of previous day's candlestick. If current candle low is not lower than previous candle then also it is fine as opening lower signifies downtrend and in this formation main focus is on candle body and not high and/or low.

Lets try to understand via simple numerical example.

Day 1 

Open 100 
High 102
Low 87
Close 90

Day 2

Open 85 
High 98
Low 83
Close 97

By this example we hope that this candlestick signal pattern is clear to all of you. 

Please note till now we have already discussed Bearish Engulfing, Bullish Engulfing, Evening Star, Morning Star and Dark Cloud Cover Candlestick Signals. In coming sessions we shall discuss more. 

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Please note these candlesticks signals may or may not act as reversal as there are several factors which affects price movement of underlying asset.

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Please note this blog post is for education purpose only. While utmost care is taken while writing this post but any human error cant be ruled out and we apologize for same in advance.