What it looks like
It forms after a clear fall. Candle one is a long down candle (close well below open). Candle two is also a down candle, but its whole body (open and close) sits inside the body of candle one: it opens below candle one's open and closes above candle one's close. Wicks do not matter much. The pattern's high is the higher of the two highs and its low is the lower of the two lows. It is rare unless the market gaps, because candle two usually opens near candle one's close.
What it means
Sellers were in control during the long first candle. On the second candle they still won, but only just: the move was much smaller and could not even reach the first candle's close. The fall is losing energy. That is a hesitation, not a turn, which is why it is one of the gentler signals and needs a buyer's close above the pattern before it means anything.
How to trade it
- 1
Check the setting: price should have been falling, ideally into a floor or a level that mattered before.
- 2
Do not trade the pattern on its own. Wait for a later candle to close above the pattern's high.
- 3
Buy on that close, for example on the gold 15 minute chart where a homing pigeon spans 9 points from high to low and the next candle closes above its high.
- 4
Put the stop just below the pattern's low, so about 9 to 10 points of risk in that gold example.
- 5
Aim for the nearest swing high or 2 times the stop, whichever comes first.
A close below the pattern's low. At that point the sellers have pushed past the whole pattern and the hesitation is over.
Where it works best
After a clear fall that reaches a floor, such as a previous day low or a round number. It is more useful on 15 minute and higher charts than on 1 minute charts, where small inside candles are everywhere.
WickSpeak finds the homing pigeon automatically on any chart and names it on the candles that made it. Next to the name it writes what the pattern is, how to trade it and what proves it wrong, in plain English. In Playbook you can use the homing pigeon, or any of the 146 patterns, as a condition alongside up to 12 conditions on any of 12 timeframes, then backtest it on past candles with your own costs.
Common mistakes
- Buying the second candle straight away instead of waiting for a close above the pattern's high.
- Treating it as strong. It is a hint the fall is tiring, no more.
- Trading it in the middle of a range where there was no fall to tire.
Related patterns
Questions traders ask
Is the homing pigeon bullish or bearish?
It is bullish. It appears after a fall and hints that sellers are running out of energy. It still needs a close above the pattern's high before you act.
What is the difference between a homing pigeon and a bullish harami?
Both have a small second candle inside the body of a long down candle. In a harami the second candle is usually an up candle, while in a homing pigeon both candles are down candles. The way to trade them is the same.
Why is the homing pigeon rare?
The second candle must open inside the first candle's body, below its open. In markets that trade around the clock, like gold and forex, a new candle usually opens right at the last close, so the shape appears less often unless the market gaps.
Where should the stop go on a homing pigeon?
Just below the pattern's low. A close below that low proves the pattern wrong, so there is no reason to stay in the trade after it.