Piercing Line Pattern or Rising Sun are different names for a signal candlestick pattern in trading. It appears to traders that the price will recover from a sharp decline. Today’s article will show you how to trade with this candlestick pattern in Binomo trading.
What Is Piercing Pattern?
Piercing Line pattern has another name as the Rising Sun candlestick pattern. This is a candlestick pattern that often appears at the end of a downtrend and is a signal confirming a bullish reversal. Pro traders show great interest when it comes to appearance. It is a safe condition for you to open long-term UP orders.
Structure Of The Piercing Line Pattern
This is a candlestick pattern with a similar shape to the Dark Cloud Cover pattern, but the structure is the opposite.
First candlestick: is a strong bearish red candlestick.
Second candlestick: is a green candle. Its opening price is not necessarily lower than the first candle, but its closing price must be at least higher than ½ of the first candle.
It is just like the Dark Cloud Cover candlestick pattern. Observing carefully, when pairing 2 candles of this pattern together, you will have a Hammer candlestick pattern. This is a very common reversal signal from decreasing to increasing.
In Binomo, the pattern does not appear much. However, when the price creates this candlestick pattern, it will almost reverse from down to up. This is the time to focus on opening UP orders to increase profits.
Trading Strategies Using Piercing Pattern
It is similar to the Dark Cloud Cover. This pattern is also used as a reversal signal. Combining it with other indicators or signals gives perfect entry points when trading in Binomo. Here are some common strategies using this pattern.
- A 5-minute Japanese candlestick chart.
- Open orders with an expiration time of 15 minutes or more to avoid small price movements.
Strategy 1: Combined with RSI Indicator
RSI is always one of the best indicators of market sentiment. When the pattern appears and RSI is in the oversold zone, the price is very likely to reverse from bearish to bullish.
Open an UP order = RSI is in the oversold zone + Piercing Pattern.
Strategy 2: Combined with Bollinger Bands
The Bollinger Bands (20; 2) is a price fluctuation range. It gives very accurate forecasts when the price breaks out of these bands. In this strategy, when the price falls off the lower band of the Bollinger Bands and creates the Piercing Pattern, we will take action.
Open an UP order = the price falls off the lower band of the Bollinger Bands + Piercing Pattern.
Another reversal candlestick pattern has been introduced to you. Hopefully, through this article, you will have more new trading strategies with this candlestick pattern. In the future, there will be specific articles on advanced trading strategies around the Piercing Line Pattern. Experience it today on a demo account to better understand. Thank you.