What is a Piercing Line Pattern?

The piercing line pattern is a type of candlestick formation that is characterized as a bullish indicator.

Two candlesticks form the pattern. The first candlestick should have a strong black real body and the second one should have a relatively long, white real body. The second candlestick should have its lower side of the real body placed lower than the lower side of the prior candlestick's real body and has to close at least halfway up into the first candlestick's real body.

This formation occurs within a down market trend and signifies that its end is near. The significance of the bullish signal is increased with the higher "piercing" of the white candle into the black one.

On the other hand, if the white candle "pierces" only a small portion of the black one, an assumption that there are not enough buyers can be made. Thus, the selling pressure cannot be effectively counteracted.