What is Piercing line?
Teshuvchi chiziq (piercing line)
In short
A two-candle pattern after a decline: a red candle, then a green candle that opens below the red close and closes above the middle of the red body (but below its open).
The piercing line is a two-candle bullish pattern that appears after a decline.
Conditions
- Candle 1: a long red candle; the decline continues.
- Candle 2: a green candle that opens below candle 1's close (sellers are still pressing)...
- ...but by the close it finishes above the midpoint of candle 1's body, though still below its open.
If the green candle closes above the red candle's open too, it becomes an engulfing pattern — a stronger one. The piercing line sits one notch below the engulfing.
The logic
In the morning sellers drive price to a new low, but during the session buyers recover not only that drop but more than half of the previous red candle. It shows pressure shifting between the sides. The deeper the green candle "pierces" the red body, the stronger the signal.
How to use it
The pattern means more near a support level and on rising volume. Many traders wait for the next day to close above the green candle's high as confirmation. Because daily gaps are less frequent in stocks, the "opens below" condition is sometimes relaxed. Its bearish mirror is dark cloud cover.
Green background — bullish hint, red — bearish. Engulfing: the second body fully covers the first. Harami: a small second body inside the first. Piercing line and dark cloud cover: the second candle closes past the middle of the first body. Tweezer top: two candles share the same high ($107.40).
Example
Illustrative: a stock is falling, with support around $46.
- Day 1: open $50.00, close $46.00. Body midpoint: ($50.00 + $46.00) ÷ 2 = $48.00.
- Day 2: open $45.50 (below day 1's close), close $48.60.
$48.60 is above the midpoint ($48.00) and below day 1's open ($50.00) — a piercing line. Penetration: ($48.60 − $46.00) ÷ $4.00 = 65%. If day 2's low is $45.20, a long stop goes slightly below that; the first target is day 1's open around $50.
Mistakes and tips
The "above the midpoint" condition matters: a green candle that doesn't reach halfway is not a piercing line, just a weak bounce.
In a strong downtrend a single piercing line is often just a temporary bounce; wait for confirmation.
Work out risk/reward before entering: stop below day 2's low, target at nearby resistance — the R:R calculator helps.
Frequently asked questions
- What does a piercing line pattern mean?
- That buyers are returning at the end of a decline: starting from a new low, they recovered more than half of the previous red candle. It hints at a reversal, it doesn't guarantee one.
- What is the difference between a piercing line and a bullish engulfing?
- In an engulfing, the green candle covers the entire red body. In a piercing line it only gets past the midpoint, so the signal is weaker.
Learn it in the Academy
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