A Kicker Pattern: What Is It?
A two-bar candlestick pattern known as a “kicker pattern” indicates a shift in an asset’s price trend. The price reverses sharply throughout the two candlesticks in this pattern. Traders employ it to ascertain which subset of market participants controls the direction.
The trend indicates a significant shift in the perceptions of security among investors. Usually, the shift in course happens after important information about a business, sector, or economy is made public.
Being Aware of the Kicker Pattern
Competing buyers (bulls) and sellers (bears) define the stock market. These players’ ongoing tug-of-war creates candlestick patterns. A method for tracking the price of rice that was created in Japan in the 1700s is where candlestick charting started. Candlestick analysis is valuable for trading any liquid financial instrument, including stocks, futures, and foreign currency.
One of the most trustworthy reversal patterns is the kicker pattern, which typically denotes a significant shift in a company’s fundamentals. In contrast to a gap pattern, which typically shows a gap up or down and stays in that trend, the kicker pattern is a reversal pattern. Although the designs appear to be identical, they all have separate meanings.
Either bullish or bearish kicker patterns are present. A bearish candle precedes a bullish gap up in bullish kickers. A bullish candle precedes a bearish gap in bearish kickers.
The Workings of the Kicker Pattern
Because of the kicker pattern, traders can believe the price has moved too quickly and decide to wait for a pullback. But those traders might later regret not entering a position when they first saw the kicker pattern.
The kicker pattern is unusual, yet it’s one of the best indications of a bull or bear mood. Professional traders typically don’t overreact quickly in either direction. Money managers are quick to detect, though, if and when the kicker pattern materializes.
One of the most potent indications of technical analyzers’ disposal is the kicker pattern. Its significance is increased in overbought or oversold markets. It becomes evident that the two candles behind the pattern are essential. The first candle opens and follows the current trend, while the second candle opens at the gap of the previous day and goes in the opposite direction of the previous day’s candle.
On many trading platforms, the bodies of the candles are colored in opposition to one another, producing a vibrant display that highlights the sharp shift in market mood. The kicker pattern only appears following a substantial shift in investor sentiment, so it is frequently researched with other behavioral finance or market psychology metrics.
A bearish kicker candlestick pattern example
It is highly reliable when the Bearish Kicker Candlestick Chart pattern forms during an uptrend or overbought condition.
One candlestick on day 1 is bullish because it continues an upward trend. When produced during an upward trend, it isn’t very sensible.
A bearish candlestick appears on day two. After opening at the same price as the day before (or a little lower), the candlestick moves in the opposite direction of the Day 1 candle. The second day’s candle should open at or below the first day’s candle for this pattern to be acceptable. It is a frequent expectation among traders that a gap down before the second day’s candle will raise the likelihood that prices will drop further on the second day.
Conclusion
- It is a type of candlestick design that shows when the price trend of an item will change direction.
- This pattern looks like a sharp change in price throughout the two bars.
- When traders look at kicker trends, they can tell which group of market participants is steering the direction.
- As soon as important information about a company, industry, or economy comes out, buyers usually have a significant change in how they feel about security.
- There are two kinds of kicker patterns: optimistic and pessimistic.
