Piercing Pattern

The Piercing Pattern is a candlestick patterns indicator used in Skyrexio Strategy Builder for pattern recognition and reversal/continuation signals.

Piercing Pattern

Introduction

The Piercing Pattern is a bullish reversal candlestick pattern that signals potential LONG opportunities or SHORT position exits. This two-candle pattern occurs when a bullish candle opens below the previous bearish candle's low and closes above its midpoint, indicating strong buying pressure and potential upward reversal.

How Piercing Pattern Works

Piercing Pattern is a two-candle bullish reversal pattern with specific characteristics:

• Two-candle formation - Bearish candle followed by bullish candle • Gap down opening - Second candle opens below first candle's low • Midpoint penetration - Second candle closes above first candle's midpoint • Volume confirmation - Higher volume on second candle strengthens signal • Context matters - Most effective at support levels or after downtrends

Pattern Psychology: The pattern shows initial selling pressure (gap down), but buyers step in aggressively and push price above the midpoint of the previous bearish candle. This demonstrates strong buying interest and potential trend reversal.

Key Characteristics

Attribute	Details
Category	Candlestick Patterns
Type	Bullish Reversal Signal
Primary Use	LONG entries, SHORT exits
Timeframe	All timeframes supported (1m to 1M)
Confirmation	Volume, support levels, trend context

Strategy Applications

🟢 LONG STRATEGY (Primary Use)

Piercing Pattern is primarily a LONG signal - enter long positions when the pattern appears at support levels.

Base Entry Order (LONG)

Base Order Condition: Piercing Pattern Detected
First Condition: Piercing Pattern
Timeframe: 1H

Additional Confirmation:
First Condition: Volume
Timeframe: 1H  
Operator: Greater Than
Second Condition: Simple Moving Average (20)
Timeframe: 1H

Take Profit Orders (LONG)

Rule 1: Exit condition - Target reached at resistance level
First Condition: Close Price
Timeframe: 1H
Operator: Greater Than
Second Condition: High Price
Timeframe: 1H

OR

Rule 2: Exit condition - Overbought momentum warning
First Condition: RSI
Timeframe: 1H
Operator: Greater Than
Second Condition: Value
Value: 75

OR

Rule 3: Exit condition - Bearish reversal pattern detected
First Condition: Dark Cloud Cover
Timeframe: 1H

Stop Loss Orders (LONG)

Rule 1: Stop loss - Pattern invalidated (price below piercing low)
First Condition: Close Price
Timeframe: 1H
Operator: Less Than
Second Condition: Low Price
Timeframe: 1H

OR

Rule 2: Stop loss - Bearish momentum confirmed
First Condition: MACD Line
Timeframe: 1H
Operator: Cross Below
Second Condition: MACD Signal Line
Timeframe: 1H

🔴 SHORT STRATEGY (Secondary Use)

Counter-Trend Risk: Using Piercing Pattern for SHORT entries is not recommended as it contradicts the pattern's bullish nature.

Take Profit Orders (SHORT) - Exit existing positions

Rule 1: Exit condition - Piercing Pattern signals trend reversal
First Condition: Piercing Pattern
Timeframe: 1H

OR

Rule 2: Exit condition - Support level reached
First Condition: Close Price
Timeframe: 1H
Operator: Less Than
Second Condition: Low Price
Timeframe: 1H

Related Patterns

Pattern	Relationship	Link
Dark Cloud Cover	Opposite signal	Dark Cloud Cover
Bullish Engulfing	Similar bullish signal	Bullish Engulfing
Morning Star	Three-candle bullish	Morning Star

Conclusion

Piercing Pattern is primarily a LONG signal indicating potential upward reversal after initial selling pressure. The pattern shows buyers stepping in after weakness and demonstrates strong buying interest.

Key Takeaways

• PRIMARY USE: LONG entries at support levels

• SECONDARY USE: SHORT exits when holding positions

• ALWAYS: Confirm with Volume and support level context

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