K-Line Pattern Teaching: Piercing Line
The piercing line is a pattern that corresponds to the dark cloud cover and is a K-line combination pattern that occurs in a downward market. It forms in a downtrend, with the long bearish candle of the first day maintaining a downward implication; the second day opens lower with a gap, further reinforcing the downward implication; however, the market later rebounds and closes above the midpoint of the long bearish candle's body. This behavior indicates a potential bottom, and the greater the penetration of the bullish candle into the bearish candle, the more it resembles a reversal pattern.
Characteristics of the Piercing Line
1. In a downtrend, the first day is a long bearish candle body that continues to decline.
2. On the second day, a long bullish candle body appears, with the opening price below the lowest point of the previous day.
3. The closing price of the long bullish candle is within the body of the first day but above the midpoint of the first day's body.
4. When the piercing line appears in a downtrend, the greater the penetration of the bullish candle into the bearish candle, the higher the probability of a reversal occurring.