The piercing line is a two-candle bullish reversal pattern where a down candle is followed by an up candle that opens below the prior low and closes above the midpoint of the prior body. The dark cloud cover is its bearish counterpart — an up candle followed by a down candle that opens above the prior high and closes below the midpoint. Both patterns signal a potential shift in sentiment when they appear at key support or resistance levels.
Piercing line requires the second candle to close above the fifty percent midpoint of the first candle's body. Dark cloud cover requires the second candle to close below the fifty percent midpoint of the first candle's body. Volume confirmation strengthens both patterns significantly. These patterns are most effective at the end of extended trends or at support and resistance zones. The deeper the penetration into the prior candle's body, the stronger the reversal signal.
Piercing line appearing at established support or demand zones. Dark cloud cover forming at resistance or supply zones. Confirmation candle following the pattern in the reversal direction. Higher-than-average volume on the second candle of the pattern.
Stop below the low of the piercing line pattern or above the high of the dark cloud cover. Target the next significant support or resistance level. Exit if the third candle fails to continue in the reversal direction. Trail stops using the most recent swing structure.
4H, Daily, Weekly
These patterns require the second candle to penetrate at least fifty percent of the prior body — anything less is considered a weak signal. Always combine with other confluence factors such as trendlines, moving averages, or Fibonacci levels. Dark cloud cover tends to be slightly less reliable than bearish engulfing patterns, so additional confirmation is recommended.
A harami (Japanese for 'pregnant') is a two-candle pattern where a small candle is completely contained within the prior candle's body. A bullish harami appears in downtrends; a bearish harami in uptrends. Haramis signal fading momentum but require confirmation before trading.
While not strictly a candlestick pattern, continuation triangles (ascending, descending, symmetrical) are multi-candle patterns where price contracts between converging trendlines. Breakouts from triangles tend to continue the prior trend. Triangles are measured-move patterns — the target equals the height of the triangle projected from the breakout point.
Tweezers are two-candle patterns where both candles test the same high (tweezer top) or low (tweezer bottom). The first candle extends the trend and the second candle reverses. The matching highs/lows create a visual 'tweezers' shape indicating a rejection level.
Three white soldiers are three consecutive large bullish candles with progressively higher closes, each opening within the prior candle's body. Three black crows are the bearish equivalent. These patterns signal strong momentum shifts and conviction from buyers (soldiers) or sellers (crows).