Bullish Homing Pigeon Meaning

Candlestick charts consist of several advanced versions. They showcase numerous forms of patterns and each of them has a distinct theory behind it. These patterns not only determine and evaluate the price movements in the market but also forecast them. The bullish Homing Pigeon candlestick pattern is a type of candlestick chart. This article details the bullish homing pigeon meaning followed by its formation and some examples for your better understanding.

Definition

The bullish homing pigeon pattern appears with two candles where one is a large body candle and the other is the smaller one that fits inside the body of the former candle. These two line candles are bullish reversal or upside reversal. On the contrary, the bullish homing pigeon can also be in a bearish continuation pattern as you won’t see the price of the stock moving in a straight direction. The bullish homing pigeon candlestick pattern also looks somewhat closer to the bullish harami pattern.

The bullish homing pigeon pattern forms between two black candles, where the former engulfs the latter. Since the pattern opens up bullish, the candles need to create a downward trend, as it foretells the reversal. Additionally, the first and second candles are negative, whereas the latter one is restricted within the former one.

These are a couple of criteria that the bullish homing pigeon candlestick pattern has to meet.

• The opening candle should be bearish.
• The next candle follows the same principle but it engulfs within the range of the previous candle.

The pattern formed by these two candles indicates nearly a bullish trend reversal.

Both candles must be filled, and the opening price is above the closing price. Other than that, traders could also witness the upward reversal due to the weak downtrend. Even there are no profit targets in this candlestick pattern. As far as the stop loss is concerned, once the confirmation of the upside movement, it’s set under the bullish homing pigeon candlestick pattern.

What Do You Comprehend From The Bullish Homing Pigeon Pattern?

In the bullish homing pigeon pattern, the opening starts with a bearish trend because many traders believe that the market will plummet. Such an event gives rise to buying pressure because the market has been down for quite a while. Interested parties in the market believe that the market has to turn around at some point, thereby generating an affirmative gap after the close of the first candle and before the opening of the second one.

On the flip side, the buying pressure hasn’t kept the market rising, eventually forming a bearish second candle. However, in the end, bulls somehow succeeded in keeping control in their hands, resulting in a bullish pattern.

Bullish Homing Pigeon Confirmation Indicator

Generally, traders are suggested to wait for the indication or a signal from the third and fourth candle to see whether it’s progressing in the expected direction or not. In case, if you witness the price closing over any of the candles, you can see the start of a bullish trend reversal. Now, with the second candle, if the price closes under any of the candles, it may plunge.

For better outcomes, traders are asked to carry out their trades along with other technical tools. These indicators will help traders to get the final confirmation to proceed with their trade. The bullish homing pigeon comes in handy to indicate signs of pullback at the time of an uptrend in the market. Let’s say, there’s a pullback and spike in the price. A bullish homing pigeon in an event like this could indicate the end of pullback, resulting in the continuation of upward pricing.

Stop Loss and Price Targets

Traders can take advantage of the market volatility by placing a stop loss at any price. Post the bullish homing pigeon, the spike in the price of the stock signals a bullish reversal. Here, the trader has two options in hand: they can either go long in the market by putting a stop loss under the low or put a stop loss above the first candle and under the second.

However, this is not the case every time. Sometimes, traders go for the continuation indicator where they hold on for a while till the price plummets post the bullish homing pigeon candlestick pattern. Here, the trader can either go for a short position in the market by putting a stop loss above the bullish homing pigeon candlestick pattern or second candle.

How a Bullish Homing Pigeon Pattern is Formed?

The formation of the bullish homing pigeon pattern initially opens up with a long black real body. This takes place at the time of a downward trend. The next candle forms a short one that engulfs the previous one.

Example of Bullish Homing Pigeon

Let’s consider Meta, also previously known as Facebook. The bullish homing pigeon candlestick pattern of Meta’s stock witnessed a surge in the numbers, but later, plummeted as and when it steps into the pullback. The Meta stock also saw a steep increase in the price of the stock post the pattern.

There was a gap higher and it also signalled the end of the pullback phase. For some traders, this trade would have been declared null and void, but for a few, they would have placed a large stop loss. Since there are no profit targets, no one knows what’ll happen to the price post the bullish homing pigeon candlestick pattern. With Meta stock, the chart exhibited an increase in the price along with the confirmation candle to indicate the veracity of the trade before going lower after that.