What Is a Kicker Pattern?
Let me explain what a kicker pattern is—it's a two-bar candlestick setup that signals a potential shift in the direction of an asset's price trend. You see it marked by a sudden price reversal across those two bars, and as a trader, you can use it to figure out who's calling the shots in the market, whether buyers or sellers.
This pattern highlights a major swing in how investors feel about a security, and it typically shows up right after some big news drops about a company, an industry, or the broader economy.
Key Takeaways
- A kicker pattern is a candlestick formation that forecasts a reversal in an asset's price trend.
- It features a sharp price flip over two candlesticks.
- You can rely on it to spot which market players—bulls or bears—are in control.
- It signals a big change in investor views, usually triggered by important info on a company, industry, or economy.
- Kicker patterns come in bullish or bearish varieties.
Understanding the Kicker Pattern
In the stock market, you've got buyers (the bulls) and sellers (the bears) constantly battling it out, and that's what creates these candlestick patterns. This charting method started in Japan back in the 1700s for tracking rice prices, and it's perfect for trading liquid assets like stocks, futures, or forex.
I consider the kicker pattern one of the most dependable reversal signals, often pointing to a big shake-up in a company's fundamentals. It's not like a gap pattern, which might show a price jump and then keep going in that direction—these two look alike but mean different things.
Remember, kickers are either bullish or bearish. A bullish one begins with a down candle and then gaps up positively, while a bearish one starts with an up candle and gaps down negatively.
How the Kicker Pattern Works
When you spot a kicker pattern, it might look like the price has jumped too fast, and you could be tempted to wait for a dip before jumping in. But I've seen traders regret that, wishing they'd acted when they first saw it.
This pattern doesn't show up often, which makes it rare, and pros don't usually flip their views overnight. But when it does appear, you bet money managers pay attention right away.
It's one of the strongest signals for bull or bear sentiment in technical analysis, and it packs even more punch in overbought or oversold markets. The two candles are key: the first opens and follows the current trend, then the second gaps open at the previous day's open and heads the opposite way.
On many platforms, the candle bodies are colored oppositely, visually showing that dramatic sentiment shift. Since it only happens after a real change in investor mindset, you should study it alongside other tools in market psychology or behavioral finance.
Example of a Bearish Kicker Candlestick Pattern
The bearish kicker is highly reliable when it forms during an uptrend or in an overbought zone.
On the first day, you get a bullish candle that just keeps the uptrend going—nothing special by itself in that context.
Then on day two, a bearish candle appears, opening at the same price as day one (or gapping down) and moving opposite to the prior day. For validity, that second candle needs to open at or below the first day's open. Traders often look for a gap down to boost the odds of continued falling prices after the pattern completes.
Other articles for you
Activity-based costing assigns overhead costs to products based on specific activities for more accurate cost insights.
The Community Reinvestment Act is a federal law that encourages banks to meet the credit needs of low- and moderate-income communities to combat historical discrimination like redlining.
Model risk arises when flawed financial models lead to poor decisions and adverse outcomes in finance and beyond.
Wrap accounts provide professional portfolio management for a flat fee based on assets, offering advantages for active investors but potential drawbacks for buy-and-hold strategies.
Smart beta is an investment approach that blends passive and active strategies by using alternative indices to capture market factors for better risk-adjusted returns.
A living wage is an income level that covers basic necessities to prevent poverty, distinct from the lower minimum wage.
Odious debt refers to a successor government's refusal to repay debts incurred by a previous regime on moral grounds, though it's not legally recognized internationally.
Jack Welch transformed General Electric into a high-value conglomerate through aggressive management and restructuring during his tenure as CEO from 1981 to 2001.
This text explains the definition, history, modern examples, unique aspects, and future of paper money as a fiat currency.
The harmonic mean is a type of average useful for financial ratios and rates, calculated as the reciprocal of the arithmetic mean of reciprocals.