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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.
Related guides
- Bullish engulfing pattern →
- Dark cloud pattern (opposite signal) →
- Morning Star Pattern →
- Liquidation price calculator →
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