Piercing Pattern Candlestick on Live Gold

What it shows

Each one gets a blue label marked P under the low of the second candle.

How Pravex works it out

1. The piercing pattern rule never uses a fixed size: a body, open to close, is long when it beats the 14-candle exponential average of bodies and small when it falls short of it.
2. The piercing pattern starts with a falling candle (close below open) whose body is long, above the average.
3. The second candle must be rising and open below the first candle’s low, a gap down. It must close above the middle of the first body, (open + close) ÷ 2, but below the first candle’s open.
4. Before the piercing pattern counts, the first candle has to show a downtrend, which by default means a close below the 50-candle simple moving average.
5. Example numbers, not a live price: the first candle falls from 2,024 to 2,012 with a low of 2,011. The second opens at 2,010 and closes at 2,019. The middle of the first body is 2,018, so 2,019 is above it and below 2,024.

Settings

Setting	Default	What changing it does
Trend check	SMA50	Decides what counts as a downtrend before the piercing pattern. By default one close is read against the 50-candle average; adding the 200-candle average asks for a longer trend before the piercing pattern, and switching the check off ignores the trend completely.
Label colour	Blue (#2196F3)	Change it to tell the piercing pattern apart from other patterns on the same chart. It fills the P label under the low of the last candle; the text stays white.

How traders read it

The second candle opens weak, below everything the first candle traded, and finishes deep inside the drop. That swing inside one candle is the bullish case. A close far above the middle of the first body is stronger than one that just clears it.

The low of the second candle is the usual stop, since it is the lowest price of the pattern. A close above the first candle’s open on a later candle confirms the buyers have the upper hand.

When it misleads

The gap below the first candle’s low is rare on spot gold, which trades nearly around the clock. Most labels you will see sit where trading resumes after a pause, such as the weekly open, and a gap there reflects the time away more than the trend. The downtrend test is one close below the 50-candle average. A piercing pattern label on the newest candle is provisional: that candle has not closed, and the shape may stop holding before it does.

Questions and answers

What is a piercing pattern?

Two candles after a fall: a long falling candle, then a rising candle that opens below its low and closes above the middle of its body, without reaching its open.

How is it different from a bullish engulfing?

A piercing close stays inside the first body, above its middle. A bullish engulfing closes at or above the first candle’s open.

Why is the piercing pattern rare on gold?

The second candle must open below the first candle’s low. Spot gold seldom gaps like that between candles, outside the reopen after a break.

Which pattern mirrors the piercing line after a rise?

Dark cloud cover: after a long rising candle, a falling one opens above its high and closes below the middle of its body.

Related: Dark Cloud Cover - Bearish, Engulfing - Bullish, On Neck - Bearish, All Candlestick Patterns, every indicator.