Piercing Line Candlestick & Dark Cloud Cover Candle
Piercing Line Candlestick and a Dark Cloud Cover Candle both look alike but the difference is that one occurs at the top of a Gold price uptrend (Cloud Cover) and the other occurs at the bottom of a downward XAUUSD price trend (Piercing Line).
Upward Trend Reversal - Dark Cloud Cover CandlesticksDownwards Trend Reversal - Piercing Line Candles
Piercing Line Candlestick
Piercing line candlestick is a long black body followed by a long white body candlestick.
The white body pierces the mid point of the previous black body.
This piercing line candle set-up is a bullish reversal pattern that occurs at the bottom of a market down trend. It shows that the market opens lower and closes above the midpoint of the black body candlestick.
This pattern shows that the momentum of the downtrend is reducing and the current market trend is likely to reverse & move in an upwards direction.
This piercing line candle pattern setup is shown as a piercing line signifying the market is piercing the bottom therefore representing a market floor for the XAUUSD price downward trend.
Piercing Line Candle Pattern
Technical Analysis Piercing Line Candle
A buy signal generated using the piercing line candlestick pattern is confirmed once price closes above the neckline which is the opening of the candlestick on the left of the Piercing Line candlestick as shown on the example above.
This is a bullish setup & Gold price should continue moving upwards and for a trader who puts a buy trade using this setup should put a stop loss just below the lowest price level.
Dark Cloud Cover Candlestick
Dark cloud cover candle is the opposite of piercing line candlestick - this pattern occurs at the top of an uptrend.
Dark cloud cover candlestick is a long white body followed by a long black body.
The black body pierces the mid point of the prior white body.
Dark cloud cover candle is a bearish reversal pattern that occurs at the top of an up trend.
It shows that the market opens higher and closes below the midpoint of the white body.
Dark cloud cover candlestick pattern shows that the momentum of the uptrend is reducing and the trend is likely to reverse & move in a downward direction.
This candle setup is shown known as a cloud cover signifying the cloud as a ceiling for the XAUUSD price upward trend.
Dark Cloud Cover Candle Pattern
Technical Analysis Dark Cloud Cover Candlestick
A sell signal generated using this candle pattern setup is confirmed once price closes below the neckline which is the opening of the candlestick on the left of this candle as shown above.
This is a bearish setup & XAUUSD price should continue moving downward and for a xauusd trader who puts a sell trade they should place a stop loss just above the highest price level.
Study More Tutorials & Topics:
- Placing Arrows in XAU USD Charts on MetaTrader 4 Platform
- What are XAU USD Chart Trade Patterns?
- Where to Determine When to Buy on a Gold Upward Trend
- How to Use TP XAU/USD Orders & Use Stop Loss Gold Order in MetaTrader 4 Platform
- Best XAU USD Brokers Gold Platforms for Beginners
- XAUUSD Save a Trading Template in MetaTrader 5 Trade Platform