How to identify

1.   A downtrend is under way 2.   First day is a long black day 3.   Second day is a long white day which opens below previous days low 4.   Second days close is within and above the midpoint of the first days body 5.   Second day cannot close above the body of the first day

With the Piercing Line bull, a long black body forms in a downtrend, which maintains the bearishness. A gap to the downside on the next day's open further perpetuates the bearishness. However, on the day after, the market rallies all day and closes much higher. In fact the close is above the midpoint of the body of the long black day which creates a long white day. This action causes concern to the bears and a potential bottom has been made and an opportunity for the bulls to enter the market and support the trend reversal. The more penetration into the prior day's black body, the more likely it will be a successful reversal pattern. Remember that if it closes above the body of the previous day, it is NOT a Piercing Line bull pattern, but an Engulfing bull pattern. Confirmation of the trend reversal would be with a white candlestick, a large gap up or by a higher close on the next trading day.

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