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Abandoned Baby
Belt Hold
Breakaway
Concealing Baby Swallow
Doji Star
Dragonfly Doji
Engulfing
Gravestone Doji
Hammer
Harami
Harami Cross
Homing Pigeon
Inverted Hammer
Kicking
Ladder Bottom
Mat Hold
Matching Low
Meeting Lines
Morning Doji Star
Morning Star
Piercing Line
Rising Three Methods
Separating Lines
Side by Side White Lines
Stick Sandwich
Three Inside Up
Three Line Strike
Three Outside Up
Three Stars In the South
Three While Soldiers
Tri Star
Unique Three River Bottom
Upside Gap Three Methods
Upside Tasuki Gap

Piercing Line
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Pattern: reversal
Reliability: moderate

Identification
A long black day is followed by a white day that gaps below the black day’s low and closes within and above the midpoint of the black day’s body.

The Psychology
In a downtrend or during a pullback within an uptrend, the stock gaps down, finds some buyers and then rallies. This simply signifies the possibility of a reversal that is more reliable if the gap down occurs at support and the white day is accompanied by a surge in volume.

The bullish Piercing Line is similar to bearish On Neck, bearish In Neck, bearish Thrusting, bullish Engulfing, and bullish Meeting Lines.



GE was trending sideways with well established support. Although bullish Piercing Line candles are considered reversal patterns, we think the reliability of the candle increases if played at support as shown here.



GM formed a Piercing Line candle formation at support, and that started the next leg up. How far it goes is unknown when the pattern forms. All you can do is play it and move stops according to the pricing action. In this case it turned out to be a good one.



Like the other examples, AMZN formed a bullish Piercing Line formation right at support, and that started a better than 30% move in under one week.


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