Trading Technique

Different shapes of the candlesticks

Typical candlesticks & Marubozu
Doji
Hammer and Hanging Man & Shooting Star
High Wave & Engulfing Pattern
Dark Cloud Cover
Piercing Line

Harami
Morning and Evening Star and Abandoned Baby

Tweezers

3. Piercing Line

A Dark Cloud Cover that happens at the bottom of a downtrend is know is as Piercing Line.

When you see a Dark Cloud Cover at the top of an uptrend or a Piercing Line at the bottom of a downtrend you have to wait for the next candlestick.

If the next candlesticks after a Dark Cloud Cover is a Bullish candlestick that keeps on going up and goes higher than the high price of the second candlestick, then you should consider the Dark Cloud Cover as a continuation signal.

But if the next candlesticks after a Dark Cloud Cover is a Bearish candlestick that goes down and preferably lower than the close price of the second candlestick, then the Dark Cloud Cover you have is a reversal signal.

The same thing is correct about the Piercing Line:

If the next candlesticks after a Piercing Line is a Bearish candlestick that goes down and goes lower than the close price of the second candlestick, then the Piercing Line you have is a continuation signal.

But if the next candlesticks after a Piercing Line is a Bullish candlestick that keeps on going up and preferably goes higher than the high price of the second candlestick in the Piercing Line, then the Piercing Line you have is a reversal signal.