A kicker pattern is similar to a gap pattern but a bit different. They are either bullish or bearish and signify a reversal. Bullish kickers start with a bearish candle then a bullish gap up. Bearish kickers start with a bullish candle then a bearish gap down. Kicker patterns are reversal patterns used to tell a change in trend direction of a stocks price. The kicker pattern is a popular pattern traders like to trade. Bullish kicker patterns as well as bearish kicker patterns are on the most reliable reversal patterns.
The bullish kicker has the look of gap up patterns. Conversely the bearish kicker looks like gap down patterns. The kicker pattern is a reversal pattern which is why it’s different from a gap pattern when stock trading. Gap patterns tend to gap up or down and stay in that trend. They may look similar but they each do something different.
Kicker patterns are two candlestick patterns. The kicker pattern is characterized by a sharp reversal in price over two candlesticks. Traders can then determine who’s in control of the direction the stock will be heading.
In other words, the first candlestick should be in the direction of the trend followed by a gap. The second candlestick forms in the new direction above or below the gap.
Change in Attitude
A kicker pattern informs you of a strong change in traders attitudes regarding a stock. The release of news or information is usually the cause of a change in traders attitudes.
There are two kinds of kicker patterns; bullish kickers and bearish kickers.
You can see a bullish kicker pattern on NFLX. It formed a double bottom and price began to reverse to the upside. There was bearish candlesticks followed by large bullish candlesticks which formed the bullish kicker. As a result some bull flag patterns formed as well. Note that the gap formed by the kicker was filled before continuing upwards.
Bullish kicker patterns form when a stock is in a bearish price movement. You might think that bullish kickers would form in a bullish market and that forming while bearish is an oxymoron.
Hence why it’s considered a reversal pattern. The stock gaps in the opposite direction of the trend. Which is why it’s different than a gap up pattern.
It is a two candlestick pattern so you should have a bearish candlestick followed by a bullish one. It’s important to remember that the candles never overlap.
Hence the gap. It’s also how you validate the pattern.
TWTR was in a downward price movement for about 2 months before forming a bullish kicker. You can see the bearish candle followed by a bullish candle. They did not overlap confirming the validity of the pattern.
Bearish kicker patterns are the opposite of bullish kickers. They form while the stock is in an uptrend. It informs you the bulls party is over.
The stock gaps away from the bullish trend. The bears are now in control.
The two candlesticks are also reversed. There’s a bullish candle followed by a bearish candle. Again there should be no overlapping of the 2 candles. You need the gap otherwise the pattern is null and void.
How to Trade Kicker Patterns
- How to trade kicker patterns:
- Watch for bullish or bearish pattern to form.
- If bullish, take a long when price breaks above gap up candle.
- Place stop below gap candlestick.
- If bearish, take a short when price falls below gap down candle.
- Place stop above gap candlestick.
The gaps kicker patterns form key support and resistance levels along with moving average lines. In every chart that’s been posted in this article, you’ll notice that price moves away form the moving averages
Moving average such as the simple moving average provides equilibrium to a stock. No matter how far away price moves, it will come back to those lines.
The gaps on the bullish and bearish kickers get filled also. When you draw out your support and resistance lines you must pay close attention to them.
All traders are very aware of these levels. The gaps fill and a new trend could begin or the current trend continues.
The bearish kicker that formed on C moved far away form moving average lines. It still had the bullish candle followed by the bearish candle. Price gravitate back to the moving average lines and traded inside the support and resistance made by the kicker gap. You can see a long legged doji candlesticks form at the resistance level. Doji candlesticks are indecision candles. Resistance became support and was tested again.
The Bottom Line
Kicker patterns are two candle reversal patterns. It’s important to see what other patterns they’re apart of. This can give you a clue of the upcoming move.
It’s important to remember that nothing is 100% perfect in the stock market. Even the clearest patterns and the best set ups can break down. If you study and practice before making live trades, you’ll set yourself up to be successful.