The Kicker signal is one of the most powerful signals. It works equally well in either direction. Its importance is magnified when occurring in the overbought or oversold area. This formation is indicative of a dramatic change in investor sentiment. Often this occurs due to some surprise news that hits the market, causing the massive change in sentiment. The candlesticks visually depict the magnitude of the change.
The Bearish Kicker Japanese Candlestick Pattern is a strong two candle pattern, and is the opposite of the Bullish Kicker Pattern.
The first candle opens and moves in the direction of the current up trend. Usually with little or no upper or lower wick.
The second candle opens at the same open of the first candle, or is gapped down, and moves in the opposite direction.
Rules to identify the Bearish Kicker pattern:
The first day’s open and the second day’s open are the same, or there is a slight gap down from the first day to the second day.
The price movement is in opposite directions from the opening price.
The price never retraces into the previous day’s trading range.
The signal usually occurs due to surprise news that affects investor sentiment.
Trend is usually irrelevant for the Kicker signal.
Potential Signal Strengtheners:
The longer the candles, the more dramatic the reversal.
The second day opening at the same point as the first day’s opening instead of near it’s closing is a gap down from the first day\’s closing price. Gapping down from the first day’s open further increases the probability of the reversal.
General Analysis and Investor Sentiment:
The Kicker signal demonstrates a dramatic change in investor sentiment. Something has occurred to suddenly change the direction of the price. Usually a surprise news item is the cause of this type of move since it changes investor psychology toward the news item. The signal indicates the new direction will likely persist with strength for a while because of the new investor sentiment created.
However, if you use this signal to go short and then the next day prices gap back the other way, close out the trade immediately.