Piercing Line
A two-candle reversal pattern that forms after a decline, when a green candle closes above the middle of the previous large red candle's body. It can show that more than half of the red candle's loss has been taken back and that buyers are starting to gain ground.
How it forms
- It follows a clear decline. Since it is a reversal signal, there needs to be a move to reverse.
- Candle 1 is red with a clear body: large compared with the candles around it, covering roughly more than half of its range.
- Candle 2 is green and opens at or below candle 1's close.
- Candle 2 closes above the midpoint of candle 1's body but below candle 1's open. If it closes above the open too, the pattern becomes a bullish engulfing.
In the classic definition, candle 2 opens below candle 1's low, with a gap. Crypto trades around the clock, so candle 2 usually opens at candle 1's close. The opening condition is then read as "at or below the close", and the weight shifts to the close: how deep candle 2 reaches into body 1 is what decides it. A lower wick on candle 2 that drops below candle 1's low partly replaces the "push lower, then rejection" story the gap tells.
What it suggests
The first candle shows sellers in control with a strong candle. The second starts lower or at the same level, but over the same length of time takes back more than half of the first candle's loss. This is read as buyers piercing into the decline, with the balance possibly starting to shift in favour of buyers.
A piercing line is considered a step weaker than a bullish engulfing: buyers have taken back only part of the first candle, not all of it. On its own, the pattern does not prove the decline is over. The next candle closing above candle 2's close is considered a confirmation that supports this reading.
When it strengthens, when it weakens
Strengthens
- Forming at a support zone
- A clear decline before the pattern
- Candle 2 closing deep into body 1, close to its open
- Candle 2's lower wick dropping below candle 1's low
- High volume on candle 2
- Forming on a higher timeframe (4H, 1D)
Weakens
- Forming in a flat, directionless market
- Candle 2 closing only just above the midpoint
- Candle 1 being small
- A strong resistance zone just above
- Forming on very low timeframes (1m, 5m)
The MarketLevelMap view
How it relates to zones
A piercing line means most at a support zone. Candle 1 carries price into the zone; candle 2 stays inside or just above it and pushes deep into body 1. This can be read as the attempt to break below the zone being rejected. When candle 2's wick reaches into the zone and its body closes above it, the reading is clearer.
Candle 1's open is the first concrete reference. The upper part of body 1 often lines up with a small resistance zone where the decline began. If later candles close above that level, the pattern has in effect turned into a picture as strong as a bullish engulfing.
The first resistance zone above the pattern matters too. If resistance is very close, there is little room for a recovery and the pattern is considered weaker.
When it is invalidated
If price closes below the pattern's lowest point (including both candles' wicks), the bullish scenario is considered invalid. If the pattern formed at a support zone, a close below the zone means the same.
Later candles closing back below the midpoint of candle 1's body also clearly weaken the pattern.
Often confused with
- Bullish EngulfingIts stronger relative: the green candle covers the whole red body and closes above its open too.
- Dark Cloud CoverThe opposite: after a rise, a red candle closes below the middle of the green body.
- Bullish HaramiA small green body sits inside the red body: it opens above candle 1's close and usually does not reach the midpoint.
For general information only. Not investment advice.Last updated: