Piercing / Dark Cloud Cover

A piercing pattern is a candlestick pattern formed near the support levels, and it gives us potential bullish reversal signs. It is found towards the end of a downtrend.

Once the ‘Piercing Line’ Pattern has been formed. Traders can now wait for the confirmation. The confirmation comes when the day after the green candle, the stock once again opens in green (above the previous day’s closing price). The stop loss will be the bottom of the green candle. If the price goes below that, the ‘Piercing Line’ Pattern has failed. 

A Dark Cloud Cover pattern is a candlestick pattern formed near the Resistance levels, and it gives us potential bearish reversal signs. It is found towards the end of an uptrend.

This candle formation, although very similar, should not be confused with the Bearish Engulfing candle pattern. Both patterns signal a potential trend reversal but the Dark Cloud Cover offers more attractive entry levels due to a higher close of the bearish candle than the bearish engulfing candle pattern.