Kicker Candlestick Pattern

In the science of chart reading, there are multiple patterns that traders use to try and predict stock movements. A powerful pattern that is used by many traders is the kicker candlestick pattern. It gives clear signals that the market is likely to reverse. 

Here we will look at what a kicker candlestick pattern is, why it matters, and how to interpret it. 

Meaning of Kicker Candlestick Pattern 

A kicker chart pattern is a rare but powerful pattern that signals the likelihood of a sharp reversal as it highlights a complete shift in market sentiment. It is made up of two candles. The pattern forms when there is a dramatic change in direction between the two successive candles, implying that the market players have drastically altered their perspective either from being bullish to bearish or vice versa.   

On day 1, the first candle shows up in the direction of the trend, but the candle on day 2 opens at, or beyond, the close of the first candle against the previous trend and strongly in the opposite direction. Generally, this pattern appears when there is a fundamental change in the company – say an acquisition or earnings announcement, etc.

Bullish Kicker Candlestick Pattern vs Bearish Candlestick Kicker Pattern 

There are two types of kicker candlestick patterns: bullish kicker and bearish kicker. Here are the major differences between bullish kicker candlestick pattern and bearish kicker candlestick pattern: 

Significance of Kicker Candlestick Pattern 

• Clear Reversal Signal: This pattern clearly indicates that market sentiment has swiftly swung. The sharp move away from the existing direction makes it easy to identify and act on. 

• High Reliability: The kicker pattern is highly reliable due to extreme movements in price. Once the second candle forms, it usually indicates a strong reversal that often leads to a sustained trend. 

• Works across timeframes: This pattern works well in all time frames -- whether trading on a daily, weekly or even an hourly chart and offers exciting trading opportunities. 

• Entry and Exit Points: The kicker pattern gives traders the opportunity to take a position right after the start of the new trend, giving the potential for higher profits. 

Interpretation of Kicker Candlestick Pattern 

Interpretation of the kicker candlestick pattern is rather simple, but like in any pattern, you should keep in mind the context in which it is formed. 

• Interpretation of a Bullish Kicker Pattern: When this pattern appears after a downtrend, it may indicate that the market sentiment has shifted drastically in favour of buyers. This can even be the beginning of a new uptrend. Traders can look for opportunities to go long when this pattern shows up. 

• Volume Confirmation: While the kicker pattern is quite reliable, its signal is amplified when volume is high, especially in the second candle. 

• Look for Other Confirmations: Even though the kicker candlestick pattern is a strong indication, most traders often use it along with other technical indicators, such as RSI or moving averages, to further evaluate the strength of the new trend.