Candle patterns of two or three candle lines in an upward or downward trend are important reversal signals. This article will brief you on the Piercing Pattern which consists of two candle lines in a falling market.
The first candle is a red real body one and the second is a green real body one. This green candle opens lower, ideally under the low of the prior red one. Then prices rebound to push well into the red candle’s real body. An ideal piercing pattern will have a green real body that pushes more than halfway into the prior session’s red real body. The green body pierces the downward trend, long sides overwhelm short sides.
In a downtrend, the more oversold the coin is, the stronger the predictive significance of the bullish piercing pattern signal.
The following graph is 15 minutes candle lines of LTC/BTC. At 7 pm on Dec. 23, a piercing pattern showed up. LTC’s price starts to climb, until 9 pm when a hanging man, an uptrend reverse pattern, showed. It can be seen that identifying different candlestick patterns will help us make rational investment decisions.
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