Price Action Candlestick Patterns #5 – The Piercing Line / Dark Cloud Cover Candlestick

What is The Piercing Line Candlestick?

The Piercing Line Candlestick helps to identify major bullish reversals
The first candlestick of the Piercing Line pattern is bearish. The second candlestick opens below the low of the 1st candlestick and closes above the middle.

 

What is The Dark Cloud Cover Candlestick?

The Dark Cloud Cover Candlestick helps to identify major bearish reversals
The first candlestick of the Dark Cloud Cover pattern is bullish. The second candlestick opens above the high of the 1st candlestick and closes below the middle.

Candlestick Patterns - Dark Cloud Cover 1 up close

The Piercing Line Candlestick

With a Piercing Line Candlestick, the first candle is bearish and the second candle is bullish.
The second candle opens below and closes above the mid-point of the first candle body.
This is an indication that price may have a reversal in trend direction.

 

The Dark Cloud Cover Candlestick

With a Dark Cloud Cover Candlestick, the first candle is bullish and the second candle is bearish.
The second candle opens above and closes below the mid-point of the first candle body.
This is an indication that price may have a reversal in trend direction.

 

How Do We Trade The Piercing Line Candlestick?

The Piercing Line Candlestick is traded after the full formation of the second candle on the D1 timeframe.
The SL or Stop Loss is set slightly below the low of the first candle.
Our TP Levels are set at previous major resistance levels.

 

How Do We Trade The Dark Cloud Cover Candlestick?

The Dark Cloud Cover Candlestick is traded after the full formation of the second candle on the D1 timeframe.
The SL or Stop Loss is set slightly above the high of the first candle.
Our TP Levels are set at previous major support levels.

 

Example

In the example below, we see an example of the Piercing Line Candlestick. Our expectation is that there will be a reversal of the trend following the defined downtrend.
At this point we would go long just above the second candlestick.
Our SL would be slightly below the low of the first candle.

Candlestick Patterns - Piercing Line 2

Example

In the example below, we see an example of the Piercing Line Candlestick. Our expectation is that there will be a reversal of the trend following the defined downtrend.
At this point we would go long just above the second candlestick.
Our SL would be slightly below the low of the first candle.

Candlestick Patterns - Piercing Line 3

Example

In the example below, we see an example of the Dark Cloud Cover Candlestick. Our expectation is that there will be a reversal of the trend following the defined uptrend.
At this point we would go short just below the second candlestick.
Our SL would be slightly above the high of the first candle.

Candlestick Patterns - Dark Cloud Cover 1

NEXT LESSON!

In my next lesson, I will be covering the Hammer/Hanging Man Candlestick

See you then!

Receive Our New FREE 5 Part E-Course!

Get on the list for premium content directly to your inbox

I will never give away, trade or sell your email address. You can unsubscribe at any time.