A piercing line pattern signals a potential bullish reversal after a downtrend, helping commodity traders spot shifting momentum and possible entry points.
In this guide to understanding the Piercing Line Pattern (also called simply the Piercing Pattern), we’ll show you what this chart looks like, explain its components, and teach you how to interpret it.
What Is the Piercing Line Pattern?
The Piercing Pattern is viewed as a bullish candlestick reversal pattern, similar to the Bullish Engulfing Pattern.
What Does the Piercing Pattern Look Like?
There are two components of a Piercing Pattern formation:
- A Bearish Candle on Day 1
- A Bullish Candle on Day 2
A Piercing Pattern occurs when a bullish candle on Day 2 closes above the middle of Day 1’s bearish candle, as shown in Chart 1 below:
Additionally, the price gaps down on Day 2, allowing the gap to be filled and the price to close significantly into the losses made previously in Day 1’s bearish candlestick.
Interpreting the Piercing Line Pattern
The rejection of the gap down by the bulls typically can be viewed as a bullish sign. The fact that bulls were able to press further up into the losses of the previous day adds even more bullish sentiment.
Bulls were successful in holding prices higher, absorbing excess supply and increasing the level of demand.
Example: Piercing Pattern Candlestick Chart
Chart 2 below illustrates an example of the Piercing Pattern in Intel (INTC) stock:
Potential Buy Signal
Generally, other technical indicators are used to confirm a buy signal given by the Piercing Pattern (i.e., downward trendline break).
Since the Piercing Pattern means that bulls were unable to completely reverse the losses of Day 1, more bullish movement might be expected before an outright potential buy signal is given.
Also, more volume than usual on the bullish advance on Day 2 might be a stronger indicator that bulls have taken charge and that the prior downtrend is likely ending.
Additional Bullish Indicators
Bullish Engulfing Pattern is typically viewed as being more bullish than the Piercing Pattern because it completely reverses the losses of Day 1 and adds new gains.
For further study, the bearish equivalent of the Piercing Pattern is the Dark Cloud Cover.
Regulated Brokers: Where Can I Trade Commodities?
FAQ
Below we answer some common questions about Linear Regression Line indicators.
What is a bull market?
A bull market is one in which prices are rising, encouraging buying. “Bullish” can be used to describe an entire time period for a market or simply the situation in which the price of an asset or derivative instrument is temporarily on an uptrend.
A bear market is in contrast to a bull market, in which prices are falling, encouraging selling.
Further Reading on Reversal Patterns
These reversal tools complement Piercing Line Pattern: Bearish Engulfing Pattern, Dragonfly Doji, and Head & Shoulders.
Technical analysis is most widely used in CFD and forex trading. If you’re ready to apply these techniques, browse our vetted CFD brokers or forex brokers.
Update history
This page was revised 4 times between August 2020 and April 2026.
Added broker recommendation section with links to vetted CFD and forex providers in Further Reading.
Removed broker comparison table and generic technical analysis links, replaced with curated list of reversal patterns complementing the Piercing Line Pattern.
Added introductory section, restructured content with new headings, improved grammatical clarity in multiple sections, and reorganized broker and FAQ content under new headings.
Reorganized content with new structural sections for chart examples and buy signals, added trading broker recommendations, and streamlined explanation of pattern mechanics.
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