The bullish homing pigeon is a bullish indicator, and consists of candlestick chart patterns. It is an indicator that you will use to initiate a call binary option, as it is typically an indicator that a bearish trend is about to reverse itself. Here, we will go over the basics that you need to know before you start using this pattern in your own trading, and what things you should be looking out for in order to avoid incorrect trades.
Application of this Strategy
First, this is a candlestick chart pattern, consisting of just two subsequent markings. The first is a large downward trending candlestick. The second is also downward trending, but is completely engulfed by the first. All of the second, including the high and low points, fit within the trading body as indicated by the first marking.
It is a bullish signal, which means you should only use call options when this pattern appears at the bottom of the chart. This is all downward trending behavior, but if you look deeper into it, it indicates a change in trader sentiment for the better. The second marking opens higher than the first closed, and it closes higher than the first closed, too. The low point for the session is higher than the closing of the first as well. This means that although the asset is still trending downward, it is losing momentum and is very likely to pick up steam in the coming sessions.
When you begin looking at your binary options strategy for this, keep in mind that it might take a few sessions for this anticipated behavior to manifest itself properly. If you are looking at 60 second markings, that means you may need to extrapolate out as far as 15 minutes to get the right expiry for your trades. You never want to go shorter in timeframe than 5 minutes for this. Even that might be too short in some instances. Your goal should be to focus at a range of 10 to 15 minutes before expiry, so having some ability to customize this feature in your trades will be helpful to you.
Because the first session is downward in such a strong fashion, and the second is so weak, there is a good chance that the technical indicators, such as MACD, will reflect this behavior, too. Thanks to this, this is a fairly reliable indicator, even though it is strictly a visual one when limited in this manner.
Drawbacks to the Pigeon
The bullish homing pigeon trading strategy is a visual method of interpreting price movement, and therefore has flaws. It is one of the most reliable visual indicators, though, which leads to its popularity. Still, your best shot when it comes to reducing the likelihood of error is to check MACD before you initiate a trade. MACD is a good indicator when it comes to anticipating price reversals, and works perfectly with this particular visual interpretation.
You may also find that you should check fundamental indicators to get an idea of how much you should risk per trade. If this is found at the bottom of a chart, but that trend is only a micro trend and the overall movement of the asset is still downward, you will see some success, but not as much as if the trend were already overall bullish and the downward trend that must exist for this to occur is a micro one. If the overall direction is not already upward, and you are working within a micro downward trend, your success rate will not be as nice as you might like it to be.
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