The Piercing pattern is known in Japanese as kirikomi, which means 'cutback' or 'switchback'. It is a double candlestick pattern that warns of a possible bullish trend reversal, making it a bottom reversal pattern that appears towards the end of a downtrend. The Piercing is the opposite of the Dark Cloud Cover pattern that appears in an uptrend. As the Piercing pattern is a bullish trend reversal pattern, it must appear in an existing down trend for pattern to be of significance. The Piercing pattern consists of two candlesticks with alternating colors. The first candlestick must be supportive of the current downtrend. Thus, it must be a black candlestick with a large real body that indicates that the sell off is strong. The second candlestick should gap down at the open below the low of the previous candlestick, reinforcing the notion that the downtrend is still strong. However, this candlestick must reverse direction and close above the middle of the real body of the first candlestick, making it a white or light colored, bullish candlestick. The deeper the white candlestick pierces the real body of the first candlestick, the more significant the pattern becomes. The pattern also becomes more significant if the two candlesticks that form the pattern are Marubozu candlesticks with no upper or lower shadows.
As with the Dark Cloud Cover pattern and most other trend reversal patterns, the Piercing pattern is more reliable depending on where it appears on the price chart in relation to trend lines, pivot point, and support and resistance lines, etc. A Piercing pattern at or near a lower trendline or a support line can be used as confirmation that the test of the trendline is more likely to fail. The lowest point of the Piercing pattern can also be used as a support line, and a possible location for a protective stop loss.