When is the Piercing Line confirmed?

After a decline, a candle CLOSES above the high of the two candles within 3 candles.

When is the Piercing Line invalid?

Price trades below the pattern's low before that close.

BullishReversalBeginner

Gap down, then buyers close it back above the middle of the red candle.

Verdict: SkipBitcoin 4H: 0 trades, won —, avg trade — vs random day — (too few trades to judge). Backtest

Downtrend

Piercing Line: textbook shape, step by step

Price keeps falling.

step 1/7

Direction	Long (buy)
Entry	After a decline, a candle CLOSES above the high of the two candles within 3 candles.
Cancelled if	Price trades below the pattern's low before that close.
Target	2x the pattern, projected from the breakout

3 common mistakes

Counting a close below the midpoint: that's a weaker pattern, not a piercing line.
Skipping the gap: the green candle must open below the red candle's low.
Calling it a piercing line when it closes above the red open: that's an engulfing.

same rules every time · equal size · no fees · method

Market	Trades	Won	Avg trade	Random day
Bitcoin · 4H · 2017-2026 · too few trades to judge	0	—	—	—
US large caps (50) · 1D · 2016-2026	56	52%	+0.19%	+1.42%

Verdict: SkipIt made money, but less than buying on a random day. Bitcoin had too few signals to judge.

pattern +11%random +79%

US large caps (50) 1D: pattern +11% vs random day +79% over 56 trades

Breakout Apr 27, 2021, exit May 6, 2021 (target)+6.06%

Pattern highMidpointDowntrend161.69 · Mar 18, 2021Piercing line146.69 · Apr 23, 2021Confirmed

JPMorgan 1D, real candles from Mar 18, 2021

trapBreakout Feb 25, 2022, exit Mar 7, 2022 (stop)−10.05%

Pattern highMidpointDowntrend166.88 · Jan 12, 2022Piercing line139.50 · Feb 24, 2022Confirmed

Amazon 1D, real candles from Jan 12, 2022