Stocks & Commodities V. 23:8 (62, 83): Charting The Market: Piercing Patterns by David Penn

Stocks & Commodities V. 23:8 (62, 83): Charting The Market: Piercing Patterns by David Penn

Writing about dual candle lines in his book "Beyond Candlesticks," Steve Nison recalls a particularly vivid (and metaphoric) description of a “piercing pattern” in Japanese candlestick analysis:

"… [T]he last of the bulls that were backed into a corner and came out fighting in a heroic fight. Kamikaze fights are always frightening, so the bears seeing this take to the sidelines for the moment. In this quiet period, the bulls may get reinforcements, or after all the selling that has occurred, the supply road for the bears may be already broken."

Great action. But something in this eludes me when I think about piercing patterns. In looking at what happens in a piercing pattern, what I see is almost wholly a reaction to overreaching. I don’t see a “quiet period,” in which reinforcements gather like the colonists crossing the Delaware River on the night before Christmas to surprise the British troops during the American Revolution. No, piercing patterns remind me more of World War II’s Battle of Stalingrad.