Piercing Line and Dark Cloud Cover
Two-candlestick reversal patterns where the second candle opens beyond the first candle's range and closes more than halfway into its body, signaling a bullish (piercing line) or bearish (dark cloud cover) shift.
A piercing line is a two-candlestick bullish reversal pattern forming after a downtrend: a long down candle, followed by a candle that opens below the first candle's low (reflecting continued selling pressure at the open) but then closes more than halfway up into the first candle's body, signaling a sharp intraday reversal in buyers' favor. Dark cloud cover is the mirror-image bearish counterpart, forming after an uptrend: a long up candle, followed by a candle that opens above the first candle's high but closes more than halfway down into the first candle's body.
These patterns are similar in spirit to an engulfing pattern (see Kaavon's "Engulfing Pattern" glossary definition) but require only a partial, more-than-halfway penetration into the prior candle's body rather than a complete engulfing — some technical analysts consider a full engulfing pattern a stronger signal than a piercing line or dark cloud cover specifically because of this difference in penetration depth.
Examples
- A piercing line forms when a candle opens below the prior down candle's low but then recovers to close more than halfway into that candle's body, signaling a sharp reversal in buyers' favor.
- Dark cloud cover requires only a more-than-halfway penetration into the prior candle's body, distinguishing it from a full bearish engulfing pattern, which requires completely covering the prior body.