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Thomas Bulkowski’s successful investment activities allowed him to retire at age 36. He is an internationally known author and trader with 30+ years of stock market experience and widely regarded as a leading expert on chart patterns. He may be reached at

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Bulkowski's Homing Pigeon

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Market
Industrials (^DJI):
Transports (^DJT):
Utilities (^DJU):
Nasdaq (^IXIC):
S&P500 (^GSPC):
As of 06/21/2017
21,410 -57.11 -0.3%
9,293 -11.21 -0.1%
730 -4.82 -0.7%
6,234 45.92 0.7%
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21,600 or 21,000 by 07/01/2017
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720 or 745 by 07/01/2017
6,300 or 6,000 by 07/01/2017
2,525 or 2,390 by 07/01/2017

Written by and copyright © 2005-2017 by Thomas N. Bulkowski. All rights reserved. Disclaimer: You alone are responsible for your investment decisions. See Privacy/Disclaimer for more information.

My book, Encyclopedia of Candlestick ChartsEncyclopedia of Candlestick Charts book., pictured on the left, takes an in-depth look at candlesticks, including performance statistics.

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The homing pigeon is an interesting name for a candlestick. This candlestick is an inside day, something that traders using traditional western methods might recognize. However, the identification rules do not mention shadows, so it is possible that some homing pigeons are not inside days at all.

The homing pigeon is supposed to act as a bullish reversal, but testing found that it performs as a bearish continuation 56% of the time. That is what I call "near random" because you won't be able to tell the breakout direction with any certainty. Despite the poor reversal rate, the overall performance is quite good, ranking 21st, suggesting that the post breakout trend can be a worthwhile move.

Homing Pigeon Important Results

Theoretical performance: Bullish reversal
Tested performance: Bearish continuation 56% of the time
Frequency rank: 34
Overall performance rank: 21
Best percentage meeting price target: 68% (bull market, up breakout)
Best average move in 10 days: 4.76% (bear market, up breakout)
Best 10-day performance rank: 33 (bear market, up breakout)

All ranks are out of 103 candlestick patterns with the top performer ranking 1. "Best" means the highest rated of the four combinations of bull/bear market, up/down breakouts.

The above numbers are based on hundreds of perfect trades. See the glossary for definitions.

The ideal homing pigeon candlestick
Homing Pigeon
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Homing Pigeon Discussion

As I mentioned in the introduction, the homing pigeon acts as a bearish continuation 56% of the time when it is supposed to be a bullish reversal. Thus, performance is near random. With a frequency rank of 34, it is a plentiful candle, so you should have no trouble finding it nesting in the treetops. The overall performance rank is 21 and that suggests good post breakout performance.

The best average move 10 days after the breakout is a rise of 4.76% in a bear market. That move also ranks 33rd where 1 is best out of 103 candlestick types. However, a good move would be 6% or more.

Homing Pigeon Identification Guidelines

CharacteristicDiscussion
Number of candle linesTwo.
Price trend leading to the patternDownward
ConfigurationLook for a two line candle in a downward price trend. The first day should be a tall black body followed by a small black body that fits inside the body of the prior day.
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Three Trading Tidbits for Homing Pigeon

If you want a few bones from my Encyclopedia of candlestick charts book, here are three to chew on. The pages refer to the book where the tips appear.

  1. Homing pigeon candles that appear within a third of the yearly low perform best -- page 421.
  2. Select tall candles -- page 421-422.
  3. Reversals from homing pigeons occur on the right of an inverted and ascending scallop -- page 422-423.

Homing Pigeon Example

The homing pigeon candlestick on the daily scale

The chart shows a homing pigeon on the daily chart, circled in red. The first candle is a tall black one that appears in a downward price trend. The second day is also a black candle, but it is smaller and fits inside the body of the first black candle. Together, they make up the homing pigeon candle pattern.

The breakout from this homing pigeon is downward when price closes below the lowest low in the two-candle pattern. The decline is brief, lasting one day and forming a southern doji. That doji acts as a reversal and price rises in a sort of V-Shaped pattern.

-- Thomas Bulkowski

 

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Written by and copyright © 2005-2017 by Thomas N. Bulkowski. All rights reserved. Disclaimer: You alone are responsible for your investment decisions. See Privacy/Disclaimer for more information. Best marriage advice: love, honor, and negotiate.