Special Candlestick Pattern: The Kicker Signal

The Kicker Signal is arguably the strongest reversal signal. However, this is not just a bullish reversal signal. A Kicker Signal can appear at the top of an uptrend, hence being a bearish reversal signal.

The Kicker Signal is likely caused by sudden news after the previous day’s market hours.

This is how to spot a Kicker Signal:

1) Like in all the patterns we are going to discuss, the long-term trend (1-year trend) should be in an uptrend. There is very little chance to succeed if the long-term trend is against your favor. Remember, it is difficult to swim against the tide. Our job as technical chart readers is to wait for the right time when the tide itself is going where we want to go.

2) The intermediate-term trend (3 months trend) should also be preferably bullish.

3) There should be a minor correction or a pullback. Remember, as a trend follower, a minor pullback after a bullish upswing is the best time to enter.

4) The price is either in an uptrend or a downtrend. However, a candle appears that is in contradiction with the ongoing trend. For example, an extended bearish candle may form suddenly in a bullish trend and vice versa.

5) This contradicting candle closes at the previous candle’s open. Although not apparent on the chart, a gap has already formed since this candle has opened a gap away from where the price closed yesterday. It is to be noted that gap formations signal a strong price action. If an additional gap is seen from the previous day’s open, it is even better.

Kicker signal in NEPSE

6) The trading range of this contradicting candle never touches the trading range of the previous candle, not even with its shadows (wicks).

7) It is better if the contradicting candle and the candle before it are long.

8) However, if the third day’s candle gaps back the other way (the previous trend before the contradicting candle formed), get out of that stock. This confirms the formation of another candlestick pattern called the Separating Line. A separating Candle pattern is a continuation signal. There is no reversal.

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