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Piercing Line and Dark Cloud Cover

 

A piercing line and a dark cloud look alike but the difference is that one occurs at the top of a Forex uptrend (Cloud Cover) and the other occurs at the bottom of a downwards Forex trend (Piercing).

 

Upward Trend Reversal - Dark Cloud Cover Candlesticks

 

Downward Trend Reversal - Piercing Line Candlesticks

 

Piercing Line Candlestick

Piercing line is a long black body followed by a long white body candlestick.

 

The white body pierces the midpoint of the prior black body.

 

This is a bullish reversal pattern that occurs at the bottom of a market downtrend. It shows that the market opens lower and closes above the midpoint of the black body.

 

This shows that the momentum of the downtrend is reducing and the market trend is likely to reverse and move in an upward direction.

 

This pattern is shown known as a piercing line signifying the market is piercing the bottom showing a market floor for the currency price downward trend.

 

Piercing Line candlestick Pattern

Piercing Line Candlestick

 

Technical Analysis Piercing Line Candlestick

A buy signal is confirmed once price closes above the neckline which is the opening of the candlestick on the left of the Piercing Line candlestick.

 

This is a bullish setup and price should continue moving upwards and for a trader who puts a buy trade just below the lowest price level.

 

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Dark Cloud Cover Candlestick

Opposite of piercing candlestick.

 

This candlestick is a long white body followed by a long black body.

 

The black body pierces the midpoint of the prior white body.

 

This is a bearish reversal pattern that occurs at the top of an uptrend.

 

It shows that the market opens higher and closes below the midpoint of the white body.

 

This shows that the momentum of the uptrend is reducing and the market trend is likely to reverse and move in a downward direction.

 

This pattern is shown known as a cloud cover signifying the cloud as a ceiling for the currency price upward trend.

 

Dark Cloud Cover candlestick Pattern

Dark Cloud Cover Candlestick

 

Technical Analysis Dark Cloud Cover Candlestick

A sell signal is confirmed once price closes below the neckline which is the opening of the candlestick on the left of this candlestick.

 

This is a bearish setup and price should continue moving downwards and for a trader who puts a sell trade just above the highest price level.

Market Sentiment 2015:

Quantitative Easing(QE): This is when a Central Bank decides to start printing money to buy Bonds so as to stimulate Economic Growth.

ECB QE: On January 22 2015, ECB - Euro Zone Central Bank announced it was going to start (on March 2015) Quantitative Easing for Euro Zone so as to stimulate growth in the EU, devalue the EURO so that its EU exports become cheaper and also bring inflation up to around 2%.

What it Means: This means the value of the EURO is going to depreciate against all other currencies. (Not at once, but gradually)

How Long will the QE Last: From March 2015 to September 2016 - Traders are already starting to position themselves for this move even before it starts.

Market Outlook: Very Bearish for EURUSD, and EURJPY - Also for GBPUSD, GBPJPY, and AUDUSD (No Need For Technical Analysis - This is Risk Appetite -Risk Averse Speculation).

Do Not Be Left by This Once in a Lifetime Opportunity: Open an account and start selling Euros and position yourself early - ECB has got your back on this one - 1.1 Trillion Euros is What Has Been Set For This QE (€60 billion per month for 19 months). - Others are already profiting - Read the article How to Fast Track Account Opening and Open an account now.

Strategy: Sell the retracements and use 1 Hour and M15 Charts to look for best entry and exit points - Also checkout Money Management Rules.

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Technical Analysis Lessons - Lesson 38 to Lesson 44 Learn Trading Sections
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