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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

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 - how to read forex candlestick charts

 

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.

 

 

Dark Cloud Cover

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 - how to read forex candlestick charts

 

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.

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