Trading term
What is Piercing line (candlestick)?
A piercing line is a two-candle bullish reversal: a large down candle, then a candle that opens below its low but closes above the midpoint of its body. Clearing that midpoint is what separates it from a weak bounce.
The sequence tells a story of a failed sell-off. The first candle is a decisive decline. The second opens lower still — a gap that hands sellers an immediate advantage — and then buyers take control and drive price up through more than half of everything the first candle lost.
The midpoint rule is what makes the pattern testable rather than vague. A bounce that recovers a quarter of the prior candle is ordinary; recovering more than half, after opening at a fresh low, means the selling pressure was not merely paused but overwhelmed. The deeper the penetration into the first candle's body, the stronger the signal — and if the second candle closes above the first candle's open entirely, it stops being a piercing line and becomes a bullish engulfing pattern.
Its bearish mirror is dark cloud cover, where an up candle is followed by one that opens above its high and closes below the midpoint of its body.
One practical note: the pattern requires a genuine gap down at the open, which is common in stocks but rare in 24-hour markets like forex and crypto, where the strict definition is often relaxed.
Candle two opens below the prior low, then closes at $82 — above the midpoint of candle one's body. Clearing that midpoint is what separates it from a weak bounce.
For example
A stock falls from $83.00 to close at $79.00 — a large red candle whose body midpoint is $81.00. The next session opens at $78.00, below the prior low, then rallies all day to close at $82.00, well above that $81.00 midpoint. Price turns and climbs to $89.
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Explore Premium →Why it matters to you
The midpoint gives you a precise, checkable threshold rather than an impression, so the pattern can be defined in a rule and tested on real data — a rarity among candlestick formations. It also arrives with a natural invalidation point: the low of the second candle, which is where the 'sellers were overwhelmed' reading stops being true.
⚠ Halfway is the requirement, not a guideline
The most common error is calling any green candle after a red one a piercing line. Without the lower open and a close past the midpoint of the prior body, it's just a bounce — and bounces inside downtrends are constant. Check the midpoint arithmetic rather than eyeballing it, and treat the pattern as far weaker if it appears without a real gap down.