What Is the Bullish Homing Pigeon?

The bullish homing pigeon is a candlestick pattern where one large candle is followed by a smaller candle with a body located within the range of the larger candle's body. Both candles in the pattern must be black, or filled, indicating that the 澳洲幸运5官方开奖结果体彩网:closing price was lower than the opening price.

This pattern may indicate that there is a weakening of the current downward trend, which increases the likelihood of an upward reversal.

Understanding the Bullish Homing Pigeon

Bullish homing pigeons are bullish reversal patterns, although some research has suggested that it's a more accurate bearish 澳洲幸运5官方开奖结果体彩网:continuation pattern. This is because prices don't move in straight lines. During a downtrend, the price drops, then pauses or 澳洲幸运5官方开奖结果体彩网:pulls back, and then proceeds lower a🐈gain. The bullish homing pigeon could just be a pause before the price continues lower.

When used to predict a bullish reversal, traders watch for the pattern to occur during a downtrend that is weakening or nearing a 澳洲幸运5官方开奖结果体彩网:support level. At this point, they may consider exiting short positions or entering long positions. The pattern is less meaningful as a bullish reversal when it occurs in 澳洲幸运5官方开奖结果体彩网:choppy market conditions.

This candlestick pattern is similar to an 澳洲幸运5官方开奖结果体彩网:inside day, where a candlestick's entire price range falls within the price range of a previous day. Both patterns are utilized in the same way. The difference is bullish homing pigeons only look at the open and closing price rather than the entire daily range.

Bullish Homing Pigeon Confirmation

Whether using the pattern as a reversal or continuation🎃 signal, many traders wait for the next candle for confirmation of the direction. If the price moves above the open of the first or second candle, and especially if it closes there, the upward thrust provides evidence that a bullish reversal is underway. If the next candle after the pattern sees the price drop, and especially if it closes below the close of the first or second candle, that selling indicates𒊎 the price is more likely to continue dropping.

As with most candlestick patterns, bullish homing pigeons work best when used in conjunction with other 澳洲幸运5官方开奖结果体彩网:technical indicators or chart patterns. These chart patterns can serve as confirmation of a bullish reversal. For example, if the price has been ranging, a bullish homing pigeon may be a useful pattern to watch for near support. Both the rang𒉰e and homing pigeon pattern indicate that the price could head higher off support.

The pattern is also useful for signaling the end of a pullback during an uptrend. The pullback is a short-term price drop within the overall uptrend. If a bullish homing pigeon occurs during a pullback and then is followed by price movement to the upside, that could signal the pullback is ov💞er and the upward price trajectory is continuing.

Stop Loss and Price Targets

After the pattern occurs, if the price moves higher this indicates a bullish reversal. A trader could enter a 澳洲幸运5官方开奖结果体彩网:long position and place a 澳洲幸运5官方开奖结果体彩网:stop loss below the low of the pattern. Alternatively, they could place it below the low of the second candle,🍨 whichಞ will often be higher than the first candle (but not always).

If a trader decides to use the pattern to signal the continuation of a downtrend, they will wait for the price to move lower after the pattern forms. They could then enter a 澳洲幸运5官方开奖结果体彩网:short position with a stop loss above the high of the pattern.🅠 Alternatively, they could place the stop loss above the high of t♌he second candle.

The bullish homing pigeon, like most candlestick patterns, doesn't provide a 澳洲幸运5官方开奖结果体彩网:price target. The price may start a new full-blown trend after the pattern, or the price may barely move at all. A trader could utilize a price target based on a defined 澳洲幸运5官方开奖结果体彩网:risk/reward, a measured move, or they could utilize a 澳洲幸运5官方开奖结果体彩网:trailing stop.

Example of a Bullish Homing Pigeon

A bullish homing pigeon candlestick pattern appeared in Meta's, formerly Facebook, (META) stocꦉk. The stock was heading higher, but then entered a pullback phase. The price moved lower and then a bullish homing pigeon pattern emerged.

The pattern was followed by a gap higher and strong rise the following day. This sharp rise following the pattern helped provide confirmation that the pullback was over. Because of the gap higher, this trade would have had a large stop loss if it was placed below the low of the pattern. Fꦯor some traders, this may have nullified the trade. Others may have found another place to put the stop loss.

The pattern doesn't provide a profit target, and there are no assurances of how far the price will run after the pattern occurs. In this case, the price moved higher for three days following the confirmation candle before moving lower again.