Trading With Rising Sun Candlestick Pattern

The Rising Sun is a bullish reversal candlestick pattern that appears after a downtrend and signals a potential shift from selling pressure to buying strength. It is essentially the Japanese term often associated with what Western traders call the Piercing Line pattern. Structure of the Pattern

Formation:

1. First Candle– Strong bearish candle (long red/black body).

2. Second Candle– Bullish candle that:

   • Opens below the previous candle’s low (gap down — more visible in indices than currency pairs).
   • Closes above the midpoint of the first candle’s body.
   • Does not fully engulf the previous candle (if it does, that becomes Bullish Engulfing).

Market Psychology

Let’s break it down from an order-flow perspective:

• Sellers dominate the first session.
• Market opens lower the next session → continuation expectation.
• Buyers step in aggressively.
• Close happens above 50% of previous bearish body → bearish conviction weakens.

This shows demand absorption and potential shift in control. Take a look at the picture below:

In the picture, you can see a shift in psychology of traders since the appearance of piercing line candlestick- from bearish to bullish.

In some currency pairs like EURUSD, the gap condition is often absent because the market trades almost 24 hours, and you may only see this on daily chart. What matters more is:

• Strong bearish candle
• Strong bullish candle closing beyond midpoint

Key Conditions for High Probability

For better trade quality, a rising sun candle should:

• Occurs at support level

• Appears after a*clear downtrend

• Confluence with:

  • RSI oversold
  • Demand zone
  • Fibonacci retracement (50%–61.8%)
  • Liquidity sweep below prior low

Volume confirmation (in indices) strengthens it significantly. Now, take a look at the picture below, where we compared a rising sun candlestick with it's a bullish engulfing candlestick.

Engulfing shows stronger imbalance shift.

Trading Approach (Practical)

Entry:

• Conservative: Wait for next candle to break the high of the bullish candle.
• Aggressive: Enter at close of bullish candle.

Stop Loss:

Below the low of the pattern.

Target:

• Next resistance
• 1:2 RR minimum
• Structure high

The Rising Sun is reliable only in context. Alone, it is weak. When combined with:

• Structure shift
• Liquidity grab
• Strong imbalance
• HTF support

It becomes powerful.

In modern price action trading, We see it as a confirmation tool, not a primary signal.