Piercing Pattern

A Piercing Pattern occurs when a bullish candle on Day 2 closes above the middle of Day

1's bearish candle.Moreover, price gaps down on Day 2 only for the gap to be filled  and

closes significantly into the losses made previously in Day 1's bearish candlestick.

The rejection of the gap up by the bulls is a major bullish sign, and the fact that bulls

were able to press further up into the losses of the previous day adds even more bullish

sentiment. Bulls were successful in holding prices higher, absorbing excess supply and

increasing the level of demand.

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CANDLESTICK CHARTING

The Japanese developed a method of technical analysis to analyze the price of rice contracts. This technique is called candlestick charting. Steven Nison is credited with popularizing candlestick charting and has become recognized as the leading expert on their interpretation.

What do Candlesticks Look Like?

Candlestick charts are much more visually appealing than a standard two-dimensional bar chart. As in a standard bar chart, there are four elements necessary to construct a candlestick chart, the OPEN, HIGH, LOW and CLOSING price for a given time period.

Below are examples of candlesticks and a definition for each candlestick component:

The body of the candlestick is called the real body, and represents the range between
the open and closing prices.
A black or filled-in body represents that the close during that time period was lower
than the open, (normally considered bearish) and when the body is open or white, that
means the close was higher than the open (normally bullish).

The thin vertical line above and/or below the real body is called the upper/lower
shadow, representing the high/low price extremes for the period.

Bar Compared to Candlestick Charts

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