Definition
Bullish Homing Pigeon consists of a relatively long black candle and a smaller black candle.
- Trend: Reversal
- Expected trend: Bullish
- Previous trend: Bearish
- Reliability: Moderate
- Type: Bullish
- Number: 2
Recognition
- The market is in a downward trend.
- The first day is a long black candle.
- The second day is also a black candle. Its body is covered fully by the previous black candle. The shadows of the second day are not necessarily covered, but the more is covered, the more certain the forecast.
Interpretation
The first day of the formation is a black candle in the inclining trend. The next day is also a black candle, but the trading range is narrower and is included in the first day’s trading range. This weakens the power of the inclining trend. It means the appearance of the buyers on the market, which may result a reversal. The formation does not give a reversal signal, a confirmation on the third day is necessary.
Important factors
The formation is valid only if the second day’s trading range is covered by the first day’s trading range. There is no necessary large trading volume during the Bullish Homing Pigeon formation. The third day can confirm the reversal, it is important to pay attention to it. The confirmation could come from a white candle with an upward gap or a higher closing price.
