Piercing Line Trading System

Piercing Line Trading System — 2-Bar Bullish Reversal Pattern Detection for MT5 --MANUAL--

Section A: Opening Tagline

Piercing Line Trading System automatically detects bullish reversals in two-candle patterns where a bearish candle (Long Black) is followed by a reversal candle that opens below the first candle's close (a gap-down dislocation) and closes above the midpoint of the first candle's body. This measured recovery structure — where buyers push back partway into the sellers' territory but do not achieve full engulfment — signals renewed buying momentum after downtrends.

Based on Bulkowski's candlestick research, the Piercing Line is ranked 13 out of 103 patterns with a 64% reversal rate. It represents a common and reliable reversal formation, more frequent than the full Bullish Engulfing pattern and distinctly different from its bearish counterpart, the Dark Cloud Cover.

Section B: Included Tools

Each Piercing Line Trading System purchase includes access to the following companion tools at no additional cost:

1. Smart Trend Consensus MT5 — Multi-timeframe trend agreement indicator. Displays trend direction across up to 7 timeframes on a single dashboard. Helps confirm whether a Piercing Line is forming with or against the higher-timeframe trend before entry. https://www.mql5.com/en/market/product/160553

2. Price Volume Distribution MT5 — Volume profile and price distribution analysis. Identifies high-volume price zones where institutional orders cluster. Useful for confirming that Piercing Line patterns form near significant support or resistance levels. https://www.mql5.com/en/market/product/160452

3. Piercing Line Trading System EA — Automated signal execution based on indicator output buffers. Reads Entry/SL/TP levels from the indicator and places trades automatically at bar 2 candle close. Configurable lot sizing, risk per trade, and session filters. (Delivered via MQL5 private message after purchase confirmation.)

Contact the author through MQL5 messaging after purchase to receive access to the companion tools.

Section C: Pattern-Specific Detection and Quality Scoring

The indicator evaluates each completed two-bar pattern against six sequential structural gates:

1. Bar 1 Direction gate: Bar 1 must be bearish (close < open), establishing the downtrend setup.

2. Bar 1 Long Black gate: Bar 1's body must equal or exceed a minimum multiple of the 14-period Average True Range, confirming the formation represents meaningful bearish price movement. Standard threshold: body/ATR >= 0.25. Strict threshold: body/ATR >= 0.50.

3. Bar 1 Body Ratio gate: Bar 1's body must represent at least the minimum required fraction of total range, confirming that the bearish move dominated the candle structure. Standard: body/range >= 50%. Strict: body/range >= 65%.

4. Bar 2 Dislocation gate: Bar 2's open must fall below bar 1's close by at least the minimum dislocation amount, signaling that the downtrend continuation preceded the reversal. Standard threshold: (open2 - close1)/ATR >= 0.02. Strict threshold: >= 0.05.

5. Bar 2 Penetration gate: Bar 2's close must exceed the 50% midpoint of bar 1's body (penetration > 0.50), confirming that buyers have pushed back into bar 1's range and established the reversal structure. This is the core structural requirement and cannot be bypassed by quality scoring.

6. Bar 2 NOT Engulfing gate: Bar 2's close must remain below bar 1's open (close2 < open1). If close2 >= open1, the pattern is a Bullish Engulfing (a higher-conviction pattern) rather than a Piercing Line.

Downtrend context is determined from the three bars immediately before bar 1. If at least two of those bars are declining (lower closes), the pattern is classified as a Piercing Line. This context detection ensures the pattern forms in an actual downtrend rather than during consolidation.

6-Factor Quality Scoring

Each pattern that passes all six gates receives a quality score from 0 to 1 based on six weighted factors:

• Penetration depth: how deeply bar 2 closes into bar 1's body (weight: 0.35, ideal range 0.50-0.95) — deeper is better
• Body to ATR (Bar 1): bar 1's body size relative to recent Average True Range, rewarding larger candles relative to current volatility (weight: 0.25, ideal range 0.60-2.50)
• Dislocation ATR: size of the gap-down opening (open2 - close1) / ATR (weight: 0.20, ideal range 0.05-0.40)
• Body ratio (Bar 1): proportion of bar 1's total candle range occupied by the body (weight: 0.10, ideal range 0.70-1.00)
• Relative body: bar 2's body compared to bar 1's body, confirming that the reversal candle carries meaningful structure (weight: 0.05, ideal range 0.70-1.30)
• Direction changed: confirmation that bar 2 reversed the direction — always 1.0 for valid Piercing Line (weight: 0.05, ideal range 0.90-1.00)

The penetration depth factor carries the highest weight (0.35) because the depth to which bar 2 closes into bar 1's body is the core structural requirement. A pattern with bar 2 closing near or above the 75% level scores substantially higher than one barely penetrating 50%.

Two detection presets are available. Standard mode applies baseline thresholds (body/ATR >= 0.25, body ratio >= 50%, dislocation >= 0.02×ATR). Strict mode tightens all four gates (0.50, 65%, 0.05×ATR) and selects only the most clearly-formed examples. A Custom mode allows individual adjustment of each gate independently.

Entry Mode: Immediate

Piercing Line patterns use immediate entry at bar 2 candle close rather than pending stop orders. When a valid Piercing Line is confirmed on bar close, the system enters the trade at that moment. The entry is the candle close with a stop loss below the pattern low minus 0.25×ATR. Take profit levels are calculated from entry using configurable risk-reward multiples applied to the stop distance.

Section D: Shared Features Summary

• Automated Trading Levels: Every detected pattern automatically draws Entry, Stop Loss, and up to 4 Take Profit levels directly on the chart. Stop Loss can be calculated using Donchian Channel (recent swing low), ATR multiplier (fixed distance), or Pattern method (buffer beyond candle extreme).

• Multi-Timeframe Scanner (150 Symbols × 8 Timeframes): Monitor patterns across the entire market from a single chart. The scanner checks up to 150 symbols across 8 timeframes simultaneously and displays results in a sortable panel with symbol, timeframe, signal direction, quality score, and current signal state.

• Market Structure Analysis (BOS/CHOCH): Built-in Break of Structure and Change of Character detection identifies key swing points and labels structural shifts on the chart for context evaluation.

• Multi-Layer Signal Filtering: Seven independent filters can be enabled or disabled individually: quality filter, extreme zone filter (overbought/oversold rejection), direction filter (higher-timeframe trend alignment), stoploss hunt filter (sweep validation), signal zone filter (market structure proximity), spacing filter (minimum bar gap), and opposite signal filter (prevent conflicting signals).

• 4-Channel Alert System: Alerts are delivered through MT5 pop-up notification, MT5 push notification to mobile app, email, and sound alert with selectable audio file. Alerts fire at pattern detection and optionally at TP hits and SL hit.

• Signal Statistics Dashboard: A draggable panel displaying real-time performance metrics including total signals, entry trigger rate, TP1-TP4 hit rates, SL hit rate, average quality score, and win rate.

• Professional Chart Themes: Built-in color schemes (Dark, Light, Custom) allow switching the indicator's visual style to match different chart backgrounds with custom color overrides.

• Donchian Channel Trailing Stop: Optional trailing stop system uses the Donchian Channel to dynamically adjust stop loss as price moves favorably, preserving open profit without requiring a fixed exit target.

• EA Signal Buffers: Indicator outputs are available as data buffers for Expert Advisors via iCustom() for automated signal consumption without modifying indicator source.

Section E: Recommendations

Timeframes: H1 provides a reliable balance between signal frequency and structural quality. H4 produces fewer but more clearly defined formations. Lower timeframes produce more signals with higher noise; higher timeframes produce fewer with stronger context.

Symbols: The indicator works on any symbol available in MT5 Market Watch. Piercing Line formations are commonly observed on Forex major and minor pairs, XAUUSD (particularly at session crossovers on H1/H4), stock indices, and commodity instruments near identifiable support levels.

Installation:

1. Copy the indicator file to the MQL5/Indicators directory in the MT5 data folder.
2. Restart MetaTrader 5 or refresh the Navigator panel.
3. Locate Piercing Line Trading System under Custom Indicators in the Navigator.
4. Drag the indicator onto a chart and configure inputs as needed.
5. For the scanner, attach the indicator to a single chart; it will monitor all configured symbols automatically.

Notes:

• No repainting: signals are confirmed only on bar close and do not change after detection.
• Bar-close processing only: the indicator evaluates each bar pair once at close, following per-bar processing standards.
• Immediate entry mode: trade entry occurs at bar 2 close rather than via pending stop order.
• Scanner operates asynchronously and updates in the background without affecting chart rendering performance.
• Memory usage is optimized for long-running sessions; object pooling is used for all chart drawings.

Section F: Documentation Links

Detailed guides for each feature are available:

PART	Section	Description
1	INTRODUCTION	Product introduction, what the product helps you with
2	INSTALLATION & SETUP	System requirements, step-by-step installation guide
	Guide to Installing Free Indicators and EAs Included with the Mirage Trading System Purchase
3	INTERFACE DISPLAY	Explanation of the components displayed on the chart
	User Guide: Trading Lines & Signal Tracking System	The system automatically draws Entry, Stop Loss, and Take Profit lines (TP 1–4) on the chart, tracks price action for hits, records Win/Loss results, and displays real-time performance statistics.
	User Guide : Visualization, Zone Fill, Signal Dashboard & Cancelled Signals	When you attach an indicator to a chart, the system renders the following visual components for each detected signal
	User Guide: MTF SCAN & Dashboard User Guide	MTF SCAN automatically scans all Market Watch symbols across 8 timeframes (M1 to W1) and displays results on a Dashboard grid directly on your chart.
	User Guide : Chart Theme User Guide	Chart Theme is a feature that changes the entire chart color scheme in MetaTrader 5 — including the background, candles, grid, text, and Bid/Ask lines — with a single click.
4	CORE CONCEPTS	Fundamental concepts that the system is built upon
	User Guide: Market Structure Functionality in the Trading System	Identifies trend direction (Uptrend, Downtrend, Ranging) by analyzing swing highs/lows, and detects key events: BOS (trend continuation) and CHoCH (potential trend reversal).
	User Guide : Signal Types, States, and Lifecycle	A signal is the system's notification when it detects a qualifying candlestick pattern on the chart. Each signal tells you the expected price direction and provides suggested entry, stop loss, and take profit levels.
5	SIGNAL FILTERS	Filters that refine and validate trading signals
	User Guide: Trade Direction (Direction Filter) in the Trading System	Defines the allowed trading direction (Buy only, Sell only, both, or neither) as the first filter before searching for entry signals, based on current market trend.
	User Guide: Signal Zone Filter in the Trading System	Eliminates signals not near important price zones, retaining only those connected to market structures (swing high/low, BOS, CHoCH) to reduce noise.
	User Guide: StoplossHunt Filter User Guide — Filtering "SL Sweep" Signals	Identifies higher-probability signals by checking whether price "swept stoploss" before forming a pattern.
	User Guide : Extreme Zone Filter	Extreme Zone Filter is a signal filtering feature that helps avoid entering trades when price is at the top or bottom of a Donchian price channel.
	User Guide: Opposite Signal Filter	The Opposite Signal Filter is an automatic feature that prevents new signals from appearing when you already have an active trade running in the opposite direction.The principle is very simple: Don't buy when you're selling. Don't sell when you're buying.
	User Guide : Quality Filter User Guide	Quality Filter is a feature that helps you receive only the best signals — price patterns formed clearly, with balanced proportions and high reliability — and reject weak signals, dull patterns, and those below standard.
6	TRADE MANAGEMENT
	User Guide : Risk/Reward & SL Method User Guide	Risk/Reward (R:R) is the ratio between the amount of money you accept losing (Risk) and the amount of money you expect to gain (Reward) in a single trade.
	User Guide: Trailing Stop Loss (TSL) User Guide	Regular Stop Loss (SL) stays fixed in one place. You set SL at 1990.00, and it stays there forever — even if price has risen to 2030.00.Trailing Stop Loss (TSL) is different. It automatically moves in your favor when price advances. As price moves up, TSL moves up with it. When price stalls or reverses, TSL holds the best position it reached.
7	CONFIGURATION PARAMETERS GUIDE	Detailed guide to each configuration parameter
	SIGNAL SCANNING CONFIGURATION GUIDE - MIRAGE TRADING SYSTEM EA	Guide to mastering signal scanning settings within the Inputs tab, optimizing trade discovery on a single chart or across the entire market.
8	ALERTS & NOTIFICATIONS
	User Guide: Alerts & Notifications User Guide	Configure push notifications, and on-screen popups when new signals are detected.
9	SYSTEM RISKS & LIMITATIONS	Notes on system risks and limitations

Support

• Product comments section on this page
• Direct message to the author via MQL5: https://www.mql5.com/en/users/khiemni/seller
• Response time: within 24 hours