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.

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. 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.

Despite the overt morbidity of the name of this strategy, it is a fairly popular strategy to use for establishing call option position when it comes to binary options trading. It is also a very easy to use tool when it comes to quickly analyzing potential positions and finding just the right entry point.

First, the bullish abandoned baby is a pattern that we are looking for while using candlestick charts. It is called by this name because the telltale pattern consists of two large candlesticks with a small candlestick between them, yet far below.

It gives the impression that the two larger candlesticks have abandoned the tiny one as they go up in price. The pattern consists of three individual candlesticks. The first is a downward trending one, and typically consists of a large range of prices, with a high opening, and a low closing.

The next is also a downward trending one, but has a very tiny range, with the opening and closing near the body of the session. When the buyers dominate the market instead of sellers, a bulling pattern is formed. It means the closing price is more than the opening price. Green or white color represents the presence of bullish in the market. The bearish pattern is the opposite of the bullish pattern. That means the sellers are controlling the market. After seeing the bearish pattern, one can conclude that the opening price is higher than the closing price.

Also, it is represented by red or black color. Here are some helpful bearish and bullish candlestick patterns that can increase the profitability of your trading. This pattern is further divided into four parts.

Four different Doji patterns are common Doji, dragonfly Doji, Gravestone Doji, and long-legged Doji. But not all of them represent market indecisiveness. Traders can easily find a Doji pattern in the candlestick chart because it is represented by the cross shape. While trading, if the market moves upward and there is a Doji pattern, you can conclude that the selling action is getting to start by slowing down the buying momentum.

If you exit the market based on Doji pattern analysis, you can make a considerable profit. Otherwise, you could face a huge loss. A standard Doji in the candlestick chart means buying and selling prices are the same.

Its represented by a cross or a plus sign. It has a small body on the top, followed by a lower long wick. This pattern indicates that the market opened at a high price and came down. However, it increased to the same price level at the end of the trade. In a nutshell, dragonfly Doji is formed when the price is going down, but the buyers pushed it upwards at the last minute.

Gravestone Doji is the opposite of Dragonfly Doji. This pattern is formed when the closing and opening price of an asset is at the same lower level. Gravestone Doji shows that when the market was opened, its price was suddenly pushed down by the sellers. Traders can make good profitability if they trade the gravestone Doji pattern. A long-legged Doji looks similar to a common Doji.

However, it has a comparatively longer upper and lower wick. The long wick shows the indecisiveness of the market. When you see a long-legged Doji, try not to trade binary options you should know when , as it can make you lose all of your invested money. Once the wick gets shortened, you can trade. A breakout trading in the candlestick chart shows the price movement of an asset. The price of a commodity has either moved beyond the resistance level or above the support level.

The resistance or support level can also be seen as the stop loss point or an entry-level that can help traders earn huge profitability. When the price moves beyond the resistance or support level, traders have two options. Leaving the market can help those traders save themselves from huge losses. Secondly, the traders waiting for the breakout can jump in when the breakout happens to make a significant profit. After the breakout, market volatility increases, and the price moves towards the breakout direction.

Since breakout indicates a bigger price fluctuation and more volatility, it brings more profitability. To trading using this pattern, you need to analyze two things.

Firstly, the consistency of touching the resistance level. If the asset price has touched resistance and support level multiple times, their analysis becomes more valid.

And secondly, the length of time it stays in play. If the support and resistance level remain in their position for a long time, the outcome is more favorable. Traders can quickly identify the chart pattern breakout as it is generally found at the starting point of a trend.

So, if you know how to identify a breakout in the market, you can increase your profitability. The next candlestick trading pattern is the fake breakout. This pattern is the opposite of breakout, and it is exactly what it sounds like. One thing that makes a fake breakout pattern interesting is its unpredictability. The price moves in a way that traders assume that it might break out. So, they trade; however, the price deceives the trader by returning to the same level.

Fake breakout is one of the important trading patterns that even inexperienced traders can understand and identify. A false breakout in the trading chart represents one of two things. Either the price trend is going to resume soon, or the price is going to change shortly. This situation arises when traders try to enter the market when everything is stable. However, when they make an entry, the price reverse. Thus, the time frame matters in the fake breakout.

False breakout can happen in any market condition and price trend. To trade successfully in the false breakout , traders need to do a couple of things. If this happens a couple of times, you can assume that the price trend will start again. A trendline is a way of knowing the price trend of an asset in the market. Identifying the trendline can help traders to make successful trades. A trendline is a simple and easy-to-use tool, divided into categories, i. An upward trendline in the candlestick chart indicates there is an excess amount of buying in the market.

That means the price of an asset is likely to increase. On the other hand, a downward trendline indicates the supply pressure. A downward trendline makes the price fall. Also, if the trendline is flat, that means the market price is moving in a steady direction.

Traders must not hold a long position when they see a downward trendline. A trendline in a chart is created by connecting a series of prices. To get a better idea, traders must only focus on the major swing points. Once you have made a trendline, you can identify the market quickly. You must trade around the trendline to grab better trading opportunities and increase your profitability. For entering the market, you can wait till the price breaks the trendline.

It is one of the few patterns that can be easily identified and contains all the essential information. The bullish engulfing pattern in the candlestick chart shows a downtrend. That means there is a rise in the buying pattern in the market.

Two green candles represent it. Here we teach you how to use candlestick charts in order to trade successfully binary options.

Weve already talked about the nature of charts, how they are used and why they are useful tools in the field of technical analysis and trading, overall. Weve also established that there are different types of charts, all of them serving their own purpose and having their own intricate objectives. Candlestick charts arent anew phenomenon. In fact, they have been around since the 18th century, when a Japanese trader named Homma noticed an interesting trend.

Like many others before him, he observed what everyone knows today — that the price of an asset is dictated by the levels of supply and demand. However, he also noticed that there was a another, more concealed factor that played a role in the market — emotions. Homma discovered that immense differences could occur between the value and the actual price of rice under the influence of emotions. This observation is still quite accurate today, which is why todays candlestick chart analyses are based on Hommas work as a way to measure the emotional component around a stock.

Today, candlestick charting is more popular than ever. They are very useful when a trader needs a short-term perspective. However, understanding a chart of this variety can be very difficult because they are quite complicated, so we will begin with the basics. A candlestick chart can be confusing at the first glance, especially if youre more familiar with other types of charts. Its interesting how much information can be locked up in this simple structure.

Those familiar with some of the basic elements of technical price analysis have probably used candlestick charts in some of their market analysis and this is generally because these charts help you to make broad assessments with just a quick glance. But one under-utilized aspect of these charts can be seen in the candle formations, which can give strong indications of how prices are likely to move in the future.

This can be highly valuable information for binary options trades, as candlestick patterns can give a great deal of information when forecasting price direction. This is critical for knowing when a trader should enter into a CALL or a PUT, so here we will look at some of the ways candlesticks are interpreted and at some of the most commonly used patterns so that these signals can be used in trading.

But how can we interpret the information given by these charts? First we must understand the anatomy of the candle. Candlesticks are comprised of information explaining the High, Low, Open and Close for the given time period. The high is shown at the upper end of the top shadow, while the low is seen at the end of the bottom shadow. The body shows the difference between the open and close of the period, and different colors will be used depending on whether or not the opening price was higher than the closing price.

This can be seen in the graphics below:. Next, we look at the candlestick chart as a whole to see how these candles fit into the larger picture:.

Looking at the size of the candle body can also give traders important information about potential price direction. Short candle bodies indicate restricted price movement and consolidation. Conversely, longer bodies suggest stronger buying and selling pressure. Long wicks attached to these bodies suggest higher levels of volatility. Now that we understand how to interpret these charts, we will now look at ways to spot potential reversals in price which is key for constructing binary options trade ideas.

The most common patterns in this category are the Hammer and Hanging Man patterns, and we can see examples in the graphics below:. When prices are showing a strong downtrend, traders can look for bullish trading opportunities once a Hammer formation becomes apparent. The logic behind this approach comes from the fact that prices are already at extreme lows but markets have snapped back evidenced by the long lower Hammer wick.

This pattern marks a potential turning point and a good opportunity to enter into new CALL positions for the asset. Conversely, when prices are showing a strong uptrend, traders can look for bearish trading opportunities once a Hanging Man formation becomes apparent. The logic behind this approach comes from the fact that prices are already at extreme highs too expensive but markets have failed after reaching these heights evidenced by volatility of the long upper wick. This pattern marks a potential turning point and a good opportunity to enter into new PUT positions for the asset.

The next candlestick reversal patterns we will look at are the Engulfing patterns bullish and bearish. These are shown in the graphic below:. Bearish Engulfing patterns often become apparent when prices are showing a strong uptrend, and bearish trading opportunities can be taken on the expectation of a downside reversal. When these patterns are seen, traders can enter into PUT options based on these expectations. Bullish Engulfing patterns often become apparent when prices are showing a strong downtrend, and bullish trading opportunities can be taken on the expectation of a upside reversal.

The logic behind this approach comes from the fact that the previously bearish sentiment is overextended and is being overcome by bullish momentum.

Since prices are likely to continue to move higher, traders can look to establish CALL options when these patterns become apparent. From the examples above, we can see that chart candlestick patterns can provide a way to determine potential reversals in prices.

This information can be critical when looking to establish a trading bias using binary options. When prices are showing a strong downtrend, a bullish reversal candle can help to create solid opportunities for CALL options.

When prices are showing a strong uptrend, a bearish reversal pattern can be a good indication that the rally is over and that traders should consider PUT options. 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. 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. 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.

Despite the overt morbidity of the name of this strategy, it is a fairly popular strategy to use for establishing call option position when it comes to binary options trading. It is also a very easy to use tool when it comes to quickly analyzing potential positions and finding just the right entry point. First, the bullish abandoned baby is a pattern that we are looking for while using candlestick charts. It is called by this name because the telltale pattern consists of two large candlesticks with a small candlestick between them, yet far below.

It gives the impression that the two larger candlesticks have abandoned the tiny one as they go up in price. The pattern consists of three individual candlesticks. The first is a downward trending one, and typically consists of a large range of prices, with a high opening, and a low closing.

The next is also a downward trending one, but has a very tiny range, with the opening and closing near the body of the session. This is going to need to have both opened and closed below the lowermost wick of the previous candlestick. When you see this pattern, it is an indication that prices are going to rebound. You should initiate a call option here that is relative to the candlesticks that you are using.

Like many other candlestick methods, you need to give yourself enough time before the expiry so that the markets can react to the information that you have, but not as much as you typically would. One of the nice things about this method is that it marks that a price reversal has already begun to occur. If you are looking at one minute candlesticks, then a 1 to 5 minute call option is correct.

There is a danger in going out too far beyond this because of the fact that the trend has already begun, and if it is a false indicator, the psychological impact that it has on short term traders will fizzle out before the trade expires. In this respect, it is a better tool for ultrashort term traders than many other visual indicators out there, although, as you will see, it is not perfect.

Because this is linked to actual information, and because it is a well-known indicator, there is a psychological impact upon traders that see this pattern, which can lead to the desired result anyway. Do be careful about timing your trades with this. When using binary options, it is important that this pattern be at the bottom of the chart, as close to the support line as possible. If your expiry is out too far, you may also lose money, even if you are correct in your interpretation of things.

The more experience you have with using candlestick charts in your binary trading, the less of a problem this will become. Trade with an award-winning broker like IQ Option. Disclaimer: This website is independent of of all forex, crypto and binary brokers featured on it. Before trading with any of the brokers, potential clients should ensure they understand the risks and verify that the broker is licensed.

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Toggle navigation. Table Of Contents Candlestick Binary Options Bullish Homing Pigeon Candlestick Bullish Abandoned Baby Candlestick.

Two bullish candlesticks with a space between them make up the rising window, a type of candlestick pattern. Some brokers even offer these tools for free. Evening star patterns also tell about the future price reversal of an asset. Dojis are best suited for shorter-term trends lasting no longer than ten days and can be used to predict longer-term price swings too. Like the planet Mercury Morning Star , it foretells the sunrise, or the rising prices. Conversely, when prices are showing a strong uptrend, traders can look for bearish trading opportunities once a Hanging Man formation becomes apparent. Secondly, the traders waiting for the breakout can jump in when the breakout happens to make a significant profit.

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