A kicker pattern is a type of candlestick pattern that predicts a change in the direction of an asset’s price trend.
- This pattern is characterized by a sharp reversal in price over the span of two candlesticks.
- Traders use kicker patterns to determine which group of market participants is in control of the direction.
- The pattern points to a strong change in investors’ attitudes towards a security that typically follows the release of valuable information about a company, industry, or economy.
- Kicker patterns are either bullish or bearish.
Understanding the Kicker Pattern
The stock market is characterized by competing buyers (bulls) and sellers (bears). Candlesticks are a suitable technique for trading any liquid financial asset such as stocks, futures, and foreign exchange.
The kicker pattern is considered one of the most reliable reversal patterns and usually indicates a dramatic change in a company’s fundamentals. The kicker pattern is a reversal pattern, and it differs from a gap pattern, which tends to show a gap up or down and stay in that trend. The patterns look similar, but each implies something different.
How the Kicker Pattern Works
Kicker pattern is one of the strongest bull or bear sentiment indicators, the pattern is rare. Most professional traders do not rapidly overreact in one direction or another. However, if and when the kicker pattern presents itself, money managers are quick to take notice.
The bodies of the candles are opposite colors on many trading platforms, creating a colorful display of the dramatic change in investor sentiment. Because the kicker pattern occurs only after a significant change in the investor attitude; the indicator is often studied with other measures of market psychology or behavioral finance.