The Piercing Pattern is a two-candle bullish reversal signal that forms at the bottom of a downtrend. The first candle is a strong bearish (red) candle reflecting continued selling pressure. The second candle opens below the previous day's low gapping down initially but then rallies strongly, closing above the midpoint of the first candle's real body. This behaviour indicates that despite an initial continuation of selling, buyers stepped in aggressively and drove prices well into the previous bearish candle's territory before the close—a meaningful sign that downward momentum may be exhausting. The deeper the second candle closes into the first candle's body, the more significant the signal. The Piercing Pattern is the bullish counterpart of Dark Cloud Cover.
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