I had mentioned about a homing pigeon candlestick on Usha Martin thread when I put up its chart. Here’s another example of United spirits chart where today there is a homing pigeon candlestick. Here the example seems much more relevant.
On daily charts, United spirts staged a smart rally from 760 on 23 August to a high of 833 on 25 August and made a swing top at 837. Since then it has corrected and last 4 candlestick prior to today’s have been bearish candlesticks wherein open is much higher and close is well below that near to the lows of the day.
Today stock price opened higher, but closed lower than high (though not by too much) but still above yesterday’s close. This two candlestick pattern is called a homing pigeon candlestick. It can occur over various time frames, like daily, weekly , monthly and is often useful in detecting trend change on that particular time frame. We will keep observing for next few days, how it moves.
There is a small double bottom pattern also here, marked between 765 and 815, which if successful can lead to near term target of 865.
On slightly longer term time frame, we have a flag like pattern marked on chart with breakout above 850-855. Flagpole extends from 525 to 1010 and breakout point is 850. Target based on this can be 1335 if this pattern plays out. One thing I don’t like in this chart is that the flag seems very droopy though it has not corrected below 61.8% retracement of previous rally. (Ideally the flag part should not correct more than 50% , better still 38.2% of the previous rally from bottom to top of flagpole. )
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