Piercing Line

Piercing Line

A bullish signal that occurs in the context of a downtrend when, after a long bearish candle, a bullish candle opens at a new low and then closes at a level at least halfway up the body of the previous bar; this signal is reliable as a two-bar indicator of a trend reversal in proportion to the height of the second bullish bar. As the strength of the reversal signal is related to the size of the second candle, this pattern is similar to the Tweezer pattern, which is discussed later in this guide.