What is a Piercing Line candle pattern? Complete explanation of bottom reversal signals

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Check out the penetrating pattern on the OKX chart.

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What is a piercing line?

The penetrating pattern is a two-bar downward reversal pattern in which the second candle 'penetrates' more than 50% of the body of the first candle. It can be seen as a weaker version of Bullish Engulfing.

Piercing Line

🟢 Bullish Signal

In the dominant type, the second rod completely surrounds the first, but in the penetrating type, it is established only if it returns more than half.

exact conditions

Conditions	standards
Appearance location	After a downward trend
1 bag	big black candle
2-bag cigar	Gap down below the closing price of 1 bar
2nd closing price	50% or more retracement of the 1st bar body
2nd closing price	The market price of 1 bag cannot be exceeded (then it is a type of control)

50% to 99% is penetrating type, and above 100% is rising type

Reliability check

Strong Signal:

Strong retracement after gap down (more dramatic if there is a gap)
Appears near the lower band or at a major support line
Increased trading volume

Note:

If it is slightly over 50%, reliability is low (75% or higher is recommended).
Required to check next bar

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Futures trading long strategy

Entry: After confirming the closing price of the 2nd candle or the next candle. 
Stop Loss: Below the low of 1 bar 
Target: 1-bar opening level (full retracement)

If it progresses from penetrating type to rising dominant type, the target can be adjusted upward.

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