Piercing Line Candlestick Pattern in Nifty at Support Zone.Hello Everyone, today i have brought Nifty Analysis. Nifty has formed Piercing Line Candlestick Pattern, this is called a bullish reversal pattern. Nifty has taken U turn after making low at 23842.75 and given successfully closing at 24213.30 above 24000 psychological level. I feel we can see some bullish move in nifty behalf of this candlestick pattern. If i talk about Open Interest:-
Call options OI:- 2,789,700 &
Put Options OI:-3,958,100
Total PCR comes:- 1.42
It is shows mildly bullish atleast we can expect Nifty above 24000 for some days, or till expiry.
Okay now let me tell you all about Piercing line candlestick pattern:-
What Is a Piercing Pattern?
A piercing pattern is a two-day, candlestick price pattern that marks a potential short-term reversal from a downward trend to an upward trend. The pattern includes the first day opening near the high and closing near the low with an average or larger-sized trading range. It also includes a gap down after the first day where the second day begins trading, opening near the low and closing near the high. The close should also be a candlestick that covers at least half of the upward length of the previous day's red candlestick body.
Key Takeaways
The piercing pattern is a two-day candle pattern that implies a potential reversal from a downward trend to an upward trend.
This candle pattern typically only forecasts about five days out.
Three characteristics of this pattern include a downward trend before the pattern, a gap after the first day, and a strong reversal as the second candle in the pattern.
How a Piercing Pattern Works
A piercing pattern features two days where the first is decidedly influenced by sellers and where the second day responds by enthusiastic buyers. This is potentially an indication that the supply of shares that market participants want to sell has been depleted somewhat, and the price has been driven down to a level where demand for buying shares has increased and been shown to be evident. This dynamic seems to be a somewhat reliable indicator of a short-term upward forecast.
Piercing Pattern Formation
The pattern is preceded by a downward trend in price. (This may be only a short downtrend, but if the candles appear after an upward trend in price it is not an important reversal indicator).
The price gaps lower to begin the second day. (This pattern is mostly found in stocks because of their ability to have overnight gaps unlike currencies or other 24-hour trading assets. This pattern may occur in any asset class on a weekly chart, however).
The second candle must close above the midpoint of the first candle. (This signifies that buyers overwhelmed sellers on this day.)
The first candlestick is usually dark colored or red, signifying a down day, and the second is green or lighter colored, signifying a day that closes higher than it opened. When a trader is watching for a bullish reversal, any red candlestick followed by a white candlestick could be an alert, but the piercing pattern is a special indication because the reversal is likely unexpected for most market participants.
Disclaimer:- Please always do your own analysis or consult with your financial advisor before taking any kind of trades.
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