The piercing line is a two-candle bottom: a big down day, then a day that opens even lower but rallies to close more than halfway back up into the first candle. It’s supposed to show buyers overpowering a gap down, the bulls “piercing” the bears’ territory.
Out of every candlestick pattern our scanner tracks, this is the one I’d least want to trade on. Across 1,261 piercing lines on 559 US stocks and ETFs since late 2023, it had the worst record of any bullish pattern with enough cases to judge.
How it’s defined
- Day one: a long down candle.
- Day two: opens below day one’s low, then rallies to close above the midpoint of day one’s body, but not above its open.
If day two closes above day one’s open, it’s a bullish engulfing instead. The closely related bearish pattern, a rally followed by a gap up that fails halfway, is called dark cloud cover.
The numbers
| After a piercing line | Cases | Higher 1 day later | Higher 5 days later | Higher 20 days later | Typical 5-day move |
|---|---|---|---|---|---|
| Piercing line | 1,261 | 49.9% | 49.2% | 53.7% | −0.08% |
| Any day | 413,576 | 51.9% | 53.8% | 55.6% | +0.34% |
Five days later, the stock was higher less than half the time, 4.6 points below a random day. With 1,261 cases the margin of error is about 2.8 points, so this isn’t just noise. The typical five-day move was slightly negative.
After a real selloff
| Before the piercing line | Cases | Higher 5 days later | Higher 20 days later |
|---|---|---|---|
| Fell more than 5% in 10 days | 303 | 46.2% | 60.4% |
| Any day after a 5% fall | 54.0% | 56.3% |
This is the textbook setup, and over a week it was the worst of all: up only 46% of the time, against 54% for any day after a similar drop. Over a month it flips to 60.4%. With 303 cases that 20-day number has a margin of error around six points, so I wouldn’t read much into it, but it fits a pattern I keep seeing: sharp one-day rebounds after a selloff tend to give back ground first, and any recovery comes later.
Waiting for a higher close the next day didn’t help: 49.9% higher five days later, against 52.7% for any up day.
What I take from it
The piercing line is a sharp intraday reversal, and that’s the problem. By the close of day two, the stock has already bounced a lot. The short-term traders who caught that bounce sell into the next few days. If you like the stock, the data says patience usually gets you a better price.
One way to use that patience is to sell a cash-secured put below day two’s low instead of buying right away. You either get paid to wait or you get the stock cheaper.
Recent piercing lines
The scanner flagged 63 in October 2026, including CVS, EXPE and TDG on October 22 and DAL on October 20. See today’s on the candlestick scanner, and compare it with the morning star, the other textbook reversal that failed, in Do Candlestick Patterns Work?
Data: daily prices for 559 US stocks and ETFs, October 2023 to October 2026, patterns detected by TA-Lib. Educational only, not financial advice.