Piercing Line Candlestick and Dark Cloud Cover Candlestick

Piercing Line Candlestick and a Dark Cloud Cover Candlestick both look alike but the difference is that one occurs at the top of a Gold price uptrend (Cloud Cover) and the other occurs at the bottom of a downwards Gold price trend (Piercing Line).

Upward Trend Reversal - Dark Cloud Cover CandlesticksDownward Trend Reversal - Piercing Line Candlesticks

Piercing Line Candlestick

Piercing line candlestick is a long black body followed by a long white body candlestick.

The white body pierces the midpoint of the prior black body.

This piercing line candlestick pattern is a bullish reversal pattern that occurs at the bottom of a market downtrend. It shows that the market opens lower and closes above the midpoint of the black body candlestick.

This pattern shows that the momentum of the downtrend is reducing and the current market trend is likely to reverse and move in an upward direction.

This piercing line candlestick pattern is shown as a piercing line signifying the market is piercing the bottom therefore representing a market floor for the Gold price downward trend.

Piercing Line Candlestick Pattern

Technical Analysis Piercing Line Candlestick

A buy signal generated using the piercing line candlestick pattern is confirmed once price closes above the neckline which is the opening of the candlestick on the left of the Piercing Line candlestick as shown on the example above.

This is a bullish setup and Gold price should continue moving upwards and for a trader who puts a buy trade using this setup should put a stop loss just below the lowest price level.

Dark Cloud Cover Candlestick

Dark cloud cover candlestick is the opposite of piercing line candlestick - this pattern occurs at the top of an uptrend.

Dark cloud cover candlestick is a long white body followed by a long black body.

The black body pierces the midpoint of the prior white body.

Dark cloud cover candlestick is a bearish reversal pattern that occurs at the top of an uptrend.

It shows that the market opens higher and closes below the midpoint of the white body.

Dark cloud cover candlestick pattern shows that the momentum of the uptrend is reducing and the market trend is likely to reverse and move in a downward direction.

This candlestick pattern is shown known as a cloud cover signifying the cloud as a ceiling for the Gold price upward trend.

Dark Cloud Cover Candlestick Pattern

Technical Analysis Dark Cloud Cover Candlestick

A sell signal generated using this candlestick pattern is confirmed once price closes below the neckline which is the opening of the candlestick on the left of this candlestick as shown above.

This is a bearish setup and Gold price should continue moving downwards and for a trader who puts a sell trade they should place a stop loss just above the highest price level.