Here is an example of Contrarian Entry with Piercing Line, RSI and SMA(50) as Take-Profit target, when during the course of a downtrend (or downward correction) the appearance of a Piercing Line pattern filtered by RSI at the oversold area.
One could consider buying when the next candle exceeds the high price of the long black candle.
Place a protective stop-loss at the bottom of the Piercing Line.
You can consider the following actions, bearing in mind that a Take-Profit strategy is heavily dependent on the trading profile of each individual.
- Close the position when the price reaches the SMA(50).
- Close 50% of the position when price travels 100% the length of the Piercing
Line pattern then close the remaining 50% when price reaches the SMA(50).
- Other combinations may be applied.