Piercing Pattern

The piercing pattern is a two-bar bullish reversal. The first candle is bearish, after a decline. The second opens below the first candle's close, often with a gap, and closes up through the halfway point of the first body, but not above its open. If it closes above the open, it is a bullish engulfing instead.

Measure the first body. The second close must be above the midpoint and below the first open. The second open should be below the first close.

Closing through the midpoint says buyers undid more than half of the prior loss. Confirmation is a later hold above that close, with the second low as risk.

If price falls back through the second candle's low, the pierce failed. A close that never reached the midpoint is not the pattern.

Labeling a candle that closes only slightly up as piercing. The midpoint rule is the definition.

The classic gap-open is common in cash equities and rare in many futures. Without the gap, require the same midpoint close and do not pretend the textbook gap was there.