Why the Piercing Line Failed to Reverse the Trend?

Why the Piercing Line Failed to Reverse the Trend?

A Piercing Line pattern is a bullish reversal signal that appears after a downtrend. However, this pattern failed to reverse the bearish trend in today’s price action due to the following key reasons:

1. Lack of Follow-Through Buying
• A strong Piercing Line requires the next candle to be bullish, closing above the previous day’s high, confirming a shift in momentum.
• Instead, today’s candle is a strong bearish engulfing bar, completely wiping out the bullish intent. This shows sellers overpowered buyers immediately.

2. Rejection at Key Resistance (Supply Zone)
• The price attempted to push higher but got rejected at 2,956-2,972 (VWAP Upper Band & VSA Resistance).
• Liquidity absorption at this level suggests smart money selling into strength, not accumulation.

3. Weak Volume Confirmation
• A strong Piercing Line should come with increasing volume, indicating strong buying pressure.
• Volume was weak (-5.8%), meaning there was no real commitment from buyers.
• A spread increase (+74.95%) without volume support suggests a liquidity grab rather than true demand.

4. Order Flow Shows More Aggressive Selling
• Delta is negative, indicating more market sells than buys.
• The footprint chart shows large sell orders dominating, meaning big players are still offloading.

5. Bearish Momentum Dominates Lower Timeframes
• 1H, 4H, and 8H charts show bearish continuation patterns with price breaking key VWAP levels.
• No higher highs or strong demand zones were created, meaning bulls are not defending.

Conclusion: No Bullish Confirmation → Bearish Continuation

A Piercing Line is only valid if buyers sustain momentum. Since today’s session completely erased the bullish signal, this is a failed reversal and more downside is expected.

Trade Plan (Bearish Bias)
• Sell Below: 2,891
• Stop Loss: 2,920
• Target 1: 2,863
• Target 2: 2,850-2,810

👉 Key Takeaway: Price action alone is not enough. Volume, order flow, and momentum must align for a true reversal.