Definition
Bullish Piercing Line formation forecasts an upcoming ascending trend, signalling a trend reversal with medium reliability. In the inclining trend, the long black candle is followed by a white candle with a downward gap. At the end of the second day, the white candle closes above the middle of the black candle’s body.
- Trend: Reversal
- Expected trend: Bullish
- Previous trend: Bearish
- Reliability: High
- Type: Bullish
- Number: 2
Recognition
- The market is in a downward trend.
- The first day is a long black candle.
- The second day is a long white candle with a gap in the trend’s direction.
- At the end of the second day, the white candle closes above the middle of the black candle’s body.
- The second day cannot close above the opening price of the previous day.
Interpretation
The market is in a downward trend. This is confirmed by the black candle on the first day of the formation. On the second day, the market opens with a gap in the trend’s direction. However, the price starts to fly and the share closes above the previous day’s closing price. The trend loses its strength and motivates the short position owners to close their positions. The buyers start thinking about opening long positions.
Important factors
The bigger range of the first day is covered by the white candle, the more reliable the trend reversal signal. Ideally, the white candle clovers at least half of the black candle’s body. To make sure the trend is continued, a confirmation on the third day is needed. The confirmation could come from a white candle with an upward gap or a higher closing price.
