Some candlestick price patterns are well known like shooting stars, hammer reversal bars, and engulfing bars. However, some of the less well known candlestick price patterns are worth noting for reading price charts. This is particularly helpful for when you are a managing a position on the longer term charts. Two patterns we are discussing today and tomorrow are the piercing pattern and the dark cloud cover. So, first let’s look at the piercing pattern for today with an example of how this looks from Apple’s price charts.
The piercing pattern described
The piercing pattern is a candlestick pattern used in trading to show that a downtrend might be ending and the price could start going up. It has two candlesticks. It is particularly useful for when assessing whether a downtrend is about to come to an end. The pattern is subtle and easily overlooked, so this is what to specifically look for. Note the gap that is needed for the second candlestick patter.
The piercing pattern on the charts
Take a look here for a market example of what candlestick 1 and candlestick 2 from the Apple Weekly chart should look like.