As of 10/29/2020
  Indus: 26,659 +139.16 +0.5%  
  Trans: 11,184 +237.90 +2.2%  
  Utils: 868 +2.32 +0.3%  
  Nasdaq: 11,186 +180.72 +1.6%  
  S&P 500: 3,310 +39.08 +1.2%  
YTD
-6.6%  
 +2.6%  
-1.3%  
 +24.7%  
 +2.5%  
  Targets    Overview: 09/29/2020  
  Up arrow29,300 or 27,400 by 11/01/2020
  Up arrow12,000 or 11,000 by 11/01/2020
  Up arrow915 or 840 by 11/01/2020
  Up arrow12,800 or 11,300 by 11/01/2020
  Up arrow3,700 or 3,400 by 11/01/2020
CPI (updated daily): Arrows on 10/23/20
As of 10/29/2020
  Indus: 26,659 +139.16 +0.5%  
  Trans: 11,184 +237.90 +2.2%  
  Utils: 868 +2.32 +0.3%  
  Nasdaq: 11,186 +180.72 +1.6%  
  S&P 500: 3,310 +39.08 +1.2%  
YTD
-6.6%  
 +2.6%  
-1.3%  
 +24.7%  
 +2.5%  
  Targets    Overview: 09/29/2020  
  Up arrow29,300 or 27,400 by 11/01/2020
  Up arrow12,000 or 11,000 by 11/01/2020
  Up arrow915 or 840 by 11/01/2020
  Up arrow12,800 or 11,300 by 11/01/2020
  Up arrow3,700 or 3,400 by 11/01/2020
CPI (updated daily): Arrows on 10/23/20

Bulkowski on the Piercing Pattern Candle Pattern

 

My book, Encyclopedia of Candlestick ChartsEncyclopedia of Candlestick Charts book., pictured on the left, takes an in-depth look at candlesticks, including performance statistics.

If you click on the above link and then buy the book (or anything) while at Amazon.com, the referral will help support this site. Thanks.

-- Tom Bulkowski

$ $ $

The piercing pattern acts in theory as it does in reality, as a bullish reversal, ranking 21 out of 103 candlestick patterns where 1 is best. Overall performance is good, too, suggesting the price trend after the breakout is a lasting and profitable one. The piercing pattern does best in a bear market, especially after a downward breakout. Upward breakouts in a bull market are the weakest of the four combinations of bull/bear market and up/down breakout direction.

Important Results
Discussion
Identification Guidelines
Three Trading Tidbits
Example
See Also

Piercing Pattern Candlestick: Important Results

Theoretical performance: Bullish reversal
Tested performance: Bullish reversal 64% of the time
Frequency rank: 40
Overall performance rank: 13
Best percentage meeting price target: 67% (bull market, up breakout)
Best average move in 10 days: -6.57% (bear market, down breakout)
Best 10-day performance rank: 13 (bear market, down breakout)

All ranks are out of 103 candlestick patterns with the top performer ranking 1. "Best" means the highest rated of the four combinations of bull/bear market, up/down breakouts.

The above numbers are based on hundreds of perfect trades. See the glossary for definitions.

The ideal piercing pattern candlestick
Piercing Pattern

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Piercing Pattern Candlestick: Discussion

The theoretical performance of the piercing pattern candlestick is as a bullish reversal and testing found that it acts that way 64% of the time. That is quite good. Better yet, the overall performance ranks 13th out of 103 candles. That is wonderful and with a frequency rank of 40, you should be able to spot it often in a historical price series or real time.

The best average move 10 days after the breakout is a drop of 6.57% in a bear market. I consider moves 6% or larger to be good ones, so this candlestick does well. The performance rank is 13, which is near the top of the list, too.

Piercing Pattern Candlestick: Identification Guidelines

CharacteristicDiscussion
Number of candle linesTwo.
Price trend leading to the patternDownward.
ConfigurationLook for a black candle followed by a white one that opens below the black candle’s low and closes between the midpoint of the black body and opening price.

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Piercing Pattern Candlestick: Three Trading Tidbits

If you want a few bones from my Encyclopedia of candlestick charts book, here are three to chew on. The pages refer to the book where the tips appear.

  1. Piercing pattern candles that appear within a third of the yearly low perform best -- page 619.
  2. Select tall candles for the best performance -- page 619.
  3. Avoid trading piercing patterns when the primary trend is downward -- page 620-621.

Piercing Pattern Candlestick: Example

The piercing pattern candlestick on the daily scale

The daily chart shows two piercing patterns circled in red. Both appear in a brief downward retrace of the primary upward price trend. Both act as reversals.

The first candle is black and the second is white. The white candle opens lower, but closes above the mid point of the black body and below the open.

It is difficult to tell from the chart if candle A shows an upward breakout or not. Candle B certainly does when price closes above the top of the candle pattern the next day. The upward trend resumes after that.

The chart patterns shown here reminds me of a simple ABC correction. Price moves in an uptrend then reverses to a down-up-down jog that is the ABC.

-- Thomas Bulkowski

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See Also

 

Support this site! Clicking any of the books (below) takes you to Amazon.com. If you buy ANYTHING while there, they pay for the referral.

My novels:  Bumper's Story Head's Law

Chart Patterns: After the Buy Getting Started in Chart Patterns, Second Edition Trading Basics Fundamental Analysis and Position Trading Swing and Day Trading Visual Guide to Chart Patterns Encyclopedia of Candlestick Charts Encyclopedia of Chart Patterns 2nd Edition Trading Classic Chart Patterns

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