In Maverick Trading’s free video titled “The Piercing Pattern”, traders learn how to spot a classic two-candle bullish reversal formation that often signals a shift in momentum from sellers to buyers. This pattern, when identified and traded properly, can offer high-probability entry opportunities during a downtrend or near key support levels.
Here, we’ll break down why the Piercing Pattern works, how to identify it, when it’s most reliable, how Maverick’s instructors recommend trading it, and how to manage risk—all while optimizing for SEO so that traders searching for “piercing pattern” or “candlestick reversal” can find this resource easily.
What Is the Piercing Pattern?
The Piercing Pattern (also called “Piercing Line”) is a two-candle bullish reversal candlestick formation. This typically appears after a downtrend and signals a potential upward move. Here’s how it’s structured:
- First Candle: A large bearish (red) candle that indicates strong selling pressure. New Trader U+1
- Second Candle: A bullish (green) candle that opens below the low of the first candle—creating a “gap down”—but recovers during the session to close above the midpoint of the first candle’s body. LiteFinance+2Appreciate Wealth+2
This recovery shows that buyers aggressively stepped in, absorbing a significant portion of the previous day’s losses.
Why the Piercing Pattern Is Important
- Momentum Shift: The pattern reflects a notable change in control—from sellers dominating to buyers reasserting strength.
- Potential Reversal Signal: After a sustained decline, a valid Piercing Pattern can act as a clue that a bullish reversal may begin.
- Defined Structure: Because the second candle must close above 50% of the first candle, the pattern establishes clear reference levels for entries, stops, and targets.
- Volume and Confirmation: When paired with increased volume or other indicators (like RSI), the reliability of the pattern improves significantly.
How to Identify a Reliable Piercing Pattern
To use the Piercing Pattern effectively, Maverick Trading recommends checking for these characteristics:
- Prior Downtrend
- The pattern should appear after a clear move downward, confirming that sellers have been in control.
- Bearish First Candle
- A strong red candle with a sizeable body—indicating that sellers had momentum.
- Bullish Second Candle with Gap Down
- The second candle opens below the low of the first candle, forming a gap.
- Mid-Body Close
- The second candle must close above the midpoint of the first candle’s body.
- Supporting Volume or Confirmation
- Stronger validity if the second candle has higher-than-average volume or if the pattern forms at a logical support zone.
How Maverick Trading Suggests Trading the Piercing Pattern
Here’s a step-by-step strategy, inspired by Maverick Trading’s video and standard technical-analysis best practices:
- Trend Analysis
- Confirm that the market has been declining (bearish trend or pullback) before considering a trade. Use moving averages, trendlines, or swing-low structure to validate the trend.
- Spot the Piercing Pattern
- Identify the first bearish candle followed by a bullish candle that gaps down then closes past the midpoint of the first.
- Validate with Context
- Look for confirmation: higher volume on the second candle, a support zone nearby, or additional bullish indicators (e.g., RSI oversold).
- Define Entry & Risk
- Entry: Consider entering on the close of the second candle or on a breakout above its high.
- Stop-Loss: Place a stop just below the low of the second (bullish) candle or below a nearby support level.
- Target Setting
- Use nearby resistance levels, measured move targets, or Fibonacci retracements to determine exit points.
- Trade Management
- Scale into the trade when possible, monitor volume and price behavior, and trail your stop as the trade moves in your favor.
Common Mistakes & Pitfalls to Avoid
Maverick Trading’s video also highlights several common errors traders make when using the Piercing Pattern:
- Trading Without Context: Using the pattern in a sideways or choppy market reduces its reliability.
- Ignoring Volume: Overlooking volume confirmation can lead to weak or failed reversal trades.
- No Follow-Through: Entering before the next candle confirms strength may expose you to false reversals.
- Poor Risk Definition: Not setting a logical stop-loss below the low of the second candle can expose you to big losses.
- Over-Confidence: Assuming every Piercing Pattern will result in a strong trend reversal; some might only produce a bounce, not a full reversal.
Final Thoughts
The Piercing Pattern is a deceptively simple yet powerful tool in technical analysis—signaling potential bullish reversals through a two-candle setup that captures a shift in sentiment. Maverick Trading’s video breaks down not just what the pattern looks like, but how to trade it smartly: combining structure, volume, confirmation, and risk management.
If you want to add a high-probability, price-action-based reversal pattern to your trading toolkit, start by watching the video, applying the rules above in chart replay, and building it into your system. With consistent practice and discipline, the Piercing Pattern can become a go-to setup for spotting meaningful bullish reversals.
Watch it now in Maverick Trading’s Free Video Library, analyze historical examples, and start trading with better clarity and intention.
