Piercing Line

Anatomy

The first candle is a strong red body. The second opens with a gap down (or below the prior close) but rallies to close more than halfway up into the prior red body — without fully engulfing it.

Market psychology

Sellers looked in control at the open, but buyers reversed the session and clawed back most of the prior decline. Closing above the midpoint shows buyers won the battle, even if not decisively.

When it matters

Meaningful after a downtrend, ideally at support. It is the bullish counterpart of the dark cloud cover and a slightly weaker cousin of the bullish engulfing — the deeper the close into the first body, the stronger.

Common beginner mistakes

• Accepting a close below the prior midpoint — if the green candle does not pierce past the 50% mark, it is not a valid piercing line.
• Confusing it with a bullish engulfing; the piercing line closes inside the prior body, the engulfing closes beyond it.

Frequently asked questions

How far must the piercing line close into the prior candle?

More than halfway (above the 50% midpoint of the prior red body). A close below that is too weak to qualify; a close above the prior open would make it a full bullish engulfing instead.

Is a piercing line bullish or bearish?

Bullish, but only after a downtrend. It signals buyers reclaiming ground. Its bearish mirror, where a red candle closes past the midpoint of a prior green body, is the dark cloud cover.