Piercing Line
Piercing Line is a financial term used to describe a situation in which a stock price falls below a previous support level and then quickly rises back above it. This is seen as a sign of strength in the stock, as it indicates that buyers are willing to purchase the stock at a lower price. The piercing line is a bullish reversal pattern that can be used to identify potential buying opportunities.
History of Piercing Line
The piercing line pattern was first identified by Japanese candlestick charting techniques. It is a two-candlestick pattern that is formed when a black candlestick is followed by a white candlestick. The white candlestick must open below the close of the previous black candlestick and then close above the midpoint of the black candlestick. This indicates that buyers are willing to purchase the stock at a lower price than the previous day’s close.
Comparison Table
| Pattern | Open | Close |
|---|---|---|
| Black Candlestick | High | Low |
| White Candlestick | Below Previous Close | Above Midpoint of Previous Black Candlestick |
Summary
The piercing line is a bullish reversal pattern that can be used to identify potential buying opportunities. It is formed when a black candlestick is followed by a white candlestick that opens below the close of the previous black candlestick and then closes above the midpoint of the black candlestick. For more information about this term, you can visit Investopedia, The Balance, and Investing.com.
See Also
- Bullish Engulfing Pattern
- Bearish Engulfing Pattern
- Bullish Harami Pattern
- Bearish Harami Pattern
- Bullish Abandoned Baby Pattern
- Bearish Abandoned Baby Pattern
- Bullish Three Inside Up Pattern
- Bearish Three Inside Down Pattern
- Bullish Three Outside Up Pattern
- Bearish Three Outside Down Pattern
