Leavitt Brothers: Education - CandleStick Patterns

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	Abandoned Baby
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	Harami Cross
	Homing Pigeon
	Inverted Hammer
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	Ladder Bottom
	Mat Hold
	Matching Low
	Meeting Lines
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	Three Line Strike
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	Three Stars In the South
	Three While Soldiers
	Tri Star
	Unique Three River Bottom
	Upside Gap Three Methods
	Upside Tasuki Gap

Homing Pigeon

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Pattern: reversal
Reliability: moderate

Identification
A long black day is followed by another black day which gaps opposite the trend and is completely engulfed by the real body of the first day.

The Psychology
In a downtrend or within a pullback of an uptrend, a long black day occurs. The next day’s gap up comes as a surprise to the shorts who thought they were sitting on a great position the previous day, but the stock gives some of its gap up back causing the candle to be filled in. This relaxes the bears and worries the bulls, and this is the exact recipe needed for a possible bounce. Confirmation is needed with a strong following day on solid volume.

The bullish Homing Pigeon is similar to the bullish Harami and bullish Matching Low.

This isn't a great example of a bullish Homing Pigeon, but it at least gives the reader a glimpse at one may look like. MDG was a fairly weak stock, so buying this pattern was risky. In hindsight it turned out to be support, but hindsight is always 20/20.

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