The piercing pattern is shown in the figure below:
This pattern resembles the engulfing bullish pattern discussed here. The main difference is that the second candle does not engulf the first candle because its closing price is below the open of the first candle (but still above the center of the body of the first candle). Therefore, this pattern is more common than the engulfing bullish candlestick.
To test it, I created a similar computer code where the set-up is almost the same as discussed here, i.e. after entry, I set a take-profit after a local maximum that occurred before.
The results of backtesting in years 2000-2017 for the Russell 3000 stocks are collected in the table below:
|Total net profit||$80383|
|Number of trades||726|
|Profitable trades [%]||57.16%|
|Average trade [%]||1.12%|
|Number of days held||20|
They can be directly compared with the results obtained for the engulfing bullish pattern. As we can observe, the engulfing bullish candlestick strategy outperforms (as expected). Of course, the piercing pattern is still profitable and cannot be excluded if combined with other tools such as testing a support etc.