When observing kicker signals of a bearish nature, you must look for specific criteria. First, you will notice that the price never retraces into the previous day’s trading range. Second, the price movement is in the opposite direction from the opening price and the first day’s open and the second day’s open are the same. Third, the trend is irrelevant for this signal. Lastly, the signal typically occurs as a result of surprising news, released before or after market hours, that affects investor sentiment. A bearish signal of this nature indicates very strong selling.

There are also instances in which bearish kicker signals are strengthened. First of all, you should look for longer candles, which make the reversal more dramatic. Second of all, you should look for the signal to gap down from the first day’s open as this further increases the probability of a reversal. What this means is that when the second day’s opening is at the exact same point as the first day’s opening instead of near its closing, this increases the probability of a reversal.

What do bearish kicker signals indicate is happening in the markets?
As previously discussed, this signal illustrates a dramatic change in investor sentiment due to surprising news that changes the direction of the price. A true kicker signal demonstrates such a drastic change in direction that the new direction will continue with significant strength for a good period of time. Investors must use caution if using this signal to go short or long, however because if the next day the prices gap back the opposite direction, then the investor must close out of the trade immediately. This does not happen very often, but if it should, investors must get out quickly.

Japanese Candlesticks are patterns that are easy to recognize and are the perfect technical analysis tool for new investors. There are additional signals such as the doji candlestick chart, the inverted hammer candlestick, the evening star candlestick, and the candlestick piercing pattern. Each signal is described and includes a brief description of what each signal indicates is happening in the markets. Additionally, you can find more definitions regarding the stock market by checking out the stock market glossary.

Once you are familiar with the 12 major candlesticks signals you can then continue your Japanese candlesticks education and learn how to identify the secondary candlestick patterns.

When witnessing this signal, there are a set number of criteria to look for. First of all, it is important to note that the trend is irrelevant for this signal. Second, this signal typically occurs due to surprising news likely to affect investor sentiment. Third, the first day’s open and the second day’s open are the same, and the price movement is in opposite directions from the opening price. Lastly, the price never retraces into the previous day’s trading range.

What does the kicker signal indicate is happening in the markets?
This signal greatly indicates a dramatic change in investor sentiment as indicated by a sudden change in direction of the price. The new trend is likely to persist with great strength for a good period of time due to a surprising event that has taken place in the markets. Be cautious however when witnessing this pattern because if this signal is used to go long and then the following day prices gap back the opposite direction, you must close out the trade immediately. 

Additionally, when witnessing this candlestick pattern you should look out for a few things. First of all, the longer the candles, the more dramatic the reversal will be. Also, since the second day’s opening is at or near the same point as the first day’s opening, gapping up from the first day’s open further increases the probability of the reversal. Basically, if an investor sees a kicker signal, he or she should immediately go long or short depending on the whether the signal is bullish or bearish.

Japanese Candlestick patterns are the perfect technical analysis tool for new investors. They are easier to recognize and can be learned pretty quickly. In addition to the kicker signal, there are many more to learn about including the bullish engulfing pattern, the morning star, the hanging man candle, and the candlestick hammer signal.  Also, for more information on the stock market, you can check out the stock market glossary as well.

Please continue your Japanese candlesticks education and read about the bearish kicker signals.

Shooting Star – Candlestick Reversal Signal

To form the Shooting Star Candlestick Reversal Signal you will need the following price activity.   First, there is an established uptrend. The pattern forms when the open and close are near the same price and signifies obvious indecision between the Bulls and Bears. There is a long upper tail, or shadow equaling at least twice the length of the real body. (The upper tail shows the extent of the price movement during the trading period) There should be little, or no, lower shadow (or tail). While not required, this pattern has even greater importance when there is a gap between the real body of the previous trading period.

What does this signal indicate is happening in the markets?
This candlestick formation depicts the battle between the Bulls and Bears. The Bulls are in charge with an established uptrend. The Bulls continue to push prices higher on the market open, but the Bears step in and bring the price back down to near the initial starting point.  This serves as an early warning that while the Bulls may have kept the price movement positive, they are loosing their ability to maintain control.

It is important to note that the visual illustration depicted in this candlestick signal also appears on a downtrend, yet it tells a very different story. This  candlestick formation found in a downtrend is called an Inverted Hammer, and signals the end of a downtrend.

While the price values are identical to bar charts, the candlestick patterns are much easier to recognize. Japanese Candlesticks are the perfect technical analysis tool  for newly beginning investors. They are much easier to recognize and can be learned very quickly.

There are many additional signals important to learn about when studying Japanese Candlesticks. While the shooting star signal is, other signals such as the candlestick hammer signal,  the hanging man candle, the candlestick piercing pattern, and the dark cloud cover are just as  important to learn.

Please continue your Japanese Candlestick education and learn more about the bullish kicker signal.

The evening star candlestick indicates that bad things are on the horizon for traders, or in other words, lower stock prices may be on their way. This pattern is a top reversal signal and is the opposite of the morning star signal. Investors must be careful when identifying the evening star candlestick  pattern since it tends to be more difficult to identify than other Japanese candlesticks patterns. The criteria required, in order for this signal to be valid includes the following conditions.

First, the stock must have been in a definite uptrend before this signal can occur. (The bulls are in complete control on the first day.) Second, the first day of the signal must be a long green (or white) body continuing the current uptrend. Third, the second day (indecision day causing the star candle formation) increases the probabilities of a reversal. (supply and demand are equal) Lastly, the third day should be a long red (or black) body that closes down at least halfway into the body of the first day’s green candle. This is the proof the bears have stepped in with strength. (supply is far greater than the demand)

Additional pattern notations for the evening star candlestick:
~The larger the white or black candle, the greater force for a reversal.
~A gap (or window) between the first and second day, adds additional odd for the reversal. (Even more advantageous is a gap occurring before and after the star candle) Note: A gap is not as common and is not required, but when you witness a gap ‘pay head’ there is potential for even greater force.
 ~The lower the third day’s candle comes down in relation to the first day’s white candle, is even more compelling as it will cause the reversal to occur with greater strength.

What does the evening star candlestick indicate is happening in the markets?
Again, this trend means that a strong uptrend has been in effect and the bulls are in full control. A tug-of-war ensues while the sellers begin to take profits. This causes great concern for the bulls, and eventually the bears are able to take over. 

There are many more signals in addition to this important reversal pattern including the bullish engulfing pattern, the candlestick hammer signal, the inverted hammer candlestick and the hanging man candle. You should begin by studying the doji candlestick chart first and then continue to learn about the other signals utilized in candlestick analysis. Learn how to increase your profit though candlestick trading online and join me in my 2-Day Trading for Profits Online Training Clinic.

Please continue your Japanese candlesticks education and read about the shooting star candlestick reversal signal.

Morning Star

What does this signal indicate is happening in the markets?
On the first day of this signal the bears are in complete control as a strong downtrend has been in place. On the second day, there is indecisiveness as this day gaps down and the range of trading taking place stays essentially the same for the day. This day indicates that the bears and the bulls are at an equilibrium thus causing the star formation. On the third day the bulls step in and they increase their buying. The bulls have been able to open the price higher than the previous day’s close therefore causing fear for the bears. As a result the bears begin to cover their short positions and the buyers are now in control.

When identifying this signal there are additional factors to look out for. First, the longer the red candle and the green candle, the more powerful the reversal. Second, there is a higher probability that a reversal will occur, with the more indecision that occurs on the second day. Another factor that increases the probability of a reversal is the gap between the first and second day. If this gap occurs it adds to the likelihood that a reversal will occur. Also, when looking at gaps, a gap that occurs before and after the second day adds to the strength of this signal. Lastly, the strength of the reversal is indicated by the magnitude in which the third day closes up more than halfway up the green candle.

There are many additional signals important to learn about when studying Japanese Candlesticks. While the morning star signal is very important, other signals such as the candlestick hammer signal, the inverted hammer candlestick, the hanging man candle, the candlestick piercing pattern, and the dark cloud cover are also equally important. Many investors begin studying candlestick patterns by learning about the doji candlestick chart and they also explore other areas of technical analysis. Learn how to increase your profit through candlestick trading online and join me in my 2-Day Trading for Profits Online Training Clinic.

Please continue your Japanese candlesticks education and read about the evening star candlestick.

The bearish candlestick harami is one of the many Japanese candlesticks that is found at the top of an uptrend, and is the exact opposite of the bullish harami candle. The Japanese define this pattern to mean pregnant or body within and it is composed as a two candle formation. In order for the bearish candlestick harami to be valid when identified, it must contain the following criteria. First, the body of the first candle is green (or white) and the body of the second candle is red (or black). Second, the stock must have been in a definite uptrend in order for this signal to occur. This can be visually depicted on a chart when the long green candle occurs at the end of the trend. In other words, when identifying this pattern, the body of the first candle must be the same color as the current trend. Third, the second day of the signal should be a red candle opening below or lower than the close of the previous day, and it should be closing above or higher than the open of the previous day’s green candle. This also means that the first body of the pattern is a long body and the second body is smaller. Lastly, confirmation is needed and the next day should show weakness in order to confirm this pattern.

What does the bearish candlestick harami pattern indicate is happening in the markets?
This is an exciting candlestick pattern because is occurs at the top of a trend! The bears step in and open the price lower than the previous day’s close. Most investors must now own this stock and cannot afford not to own it! The bulls then begin to take their profits and get out before the price closes lower for the day. In other words, more experienced investors know when they see this signal that they must take their profit and move on before the trend reverses and the ability to make money slowly diminishes. Confirmation occurs when the following day is weakened and the trend begins to reverse.

Additional pieces of information to note when identifying this bearish candlestick include two things. First, the longer the green candle and the red candle the more forceful the reversal. Second, the lower the red candle closes down on the green candle, the more convinced investors are that a reversal has occurred, regardless of the size of the red candle.

Japanese candlesticks have been in use for over 400 years and they are reliable, and provide investors with valuable insight into the market and into potential price movements. Read about the additional candlestick patterns including the candlestick hammer signal, the inverted hammer candlestick, the hanging man candle, the candlestick piercing pattern, and many others. Most investors new to candlestick trading learn about the doji candlestick chart first, and then they move on to more advanced signals. Learn how to increase your profits through candlestick trading online and join me in my 2-Day Trading for Profits Online Training Clinic.

Continue your Japanese Candlestick education and read about the morning star signal.

What does this bullish candlestick pattern indicate is happening in the markets?
This bullish signal occurs during a downtrend when the bulls step in and open the price higher than the previous day’s close. The stock gaps up as the bulls continue to preside. This is a result of investors that have held their positions, in hopes for a reversal, finally giving in and selling, thus indicating that the trend is over. In other words, the bears are concerned and the shorts begin to cover their positions. The bulls are then able to close the candle higher into the previous day’s body. To confirm this bullish candlestick pattern, on the following day the bulls must stay put while the bears move on. Basically, a strong day after convinces everyone that the trend may be in a reversal. The bullish harami candle signals to investors that it is a good time to enter into a long position.

When identifying the bullish candle it is important to note two things. First, the higher the green candle closes up on the red candle, the more convincing it is that a reversal has occurred. Second, the longer the red candle and the green candle the stronger the reversal.

There are additional signals necessary to learn about when studying candlestick charts. Japanese candlesticks have been in use for 400 years, they are reliable, and they provide traders with valuable insight to potential price movements. First you should learn about the doji candlestick chart, and then move on to more complex signals such as the candlestick hammer signal, the inverted hammer candlestick, the dark cloud cover, and the candlestick piercing pattern. There are additional candlestick patterns that every trader should learn about and these patterns will be discussed in future articles to come. Learn how to increase your profits through candlestick trading online and join me in my 2-Day Trading for Profits Online Training Clinic.

Continue your Japanese Candlestick education and read about the bearish candlestick harami.

What does this reversal pattern indicate is happening in the markets?
This pattern indicates that the bulls were in control during the uptrend where they gapped the price up, but they lost confidence and the bears stepped in to close prices near the low of the day. The bulls were unable to maintain the upward momentum and are therefore less likely to buy stock at higher price levels. It appears that the uptrend has stopped and the bears increase their sales at the lower share price. If the bears can hold control the day after the dark cloud cover appears, then the probabilities of a reversal are very high.

When witnessing this bearish reversal pattern it is important to note a few things. The higher the gap up from the previous day’s close, the more prominent the reversal because the market was unable to sustain the high price level. Also, the longer the green candle and the red candle the stronger the reversal, and the lower the red candle closes into the green candle, the stronger the reversal as well. Additionally, if the volume is high during both days, then the pattern is considered to be more valid. Traders must be careful that they don’t mistake a bearish engulfing pattern for this pattern. If the dark cloud cover were to close lower (below the open of the previous day), it becomes a bearish engulfing pattern, which has slightly stronger bearish connotations.

There are many more signals in addition to this important reversal pattern including the bullish engulfing pattern, the candlestick hammer signal, the inverted hammer candlestick and the hanging man candle. You should begin by studying the doji candlestick chart first and then continue to learn about the other signals utilized in candlestick analysis. Learn how to increase your profit though candlestick trading online and join me in my 2-Day Trading for Profits Online Training Clinic.

Continue your Japanese Candlestick education and read about the bullish harami candle.

The candlestick piercing pattern is a reversal in a down trending market similar to the bullish engulfing pattern and is therefore considered bullish. This pattern is made up of a long red (or black) stick, showing a price decline. It is then followed by a long green (or white) stick, showing a period of price increase. The green stick must start below the bottom of the red stick. In order for this pattern to signify a strong reversal, the green stick must go up halfway or more to the top of the red stick. In order to classify as a candlestick piercing pattern four criteria must be met. First, the body of the first candle is red and the body of the second candle is green as stated above. Second, the downtrend has been apparent for a good period. (A long red or black candle occurs at the end of the trend). Third, the second day opens lower than the trading of the previous day. Fourth, the green candle closes more than halfway up the red candle. When dealing with the piercing pattern there are three things to look for. First, the longer the red candle and the green candle the stronger the reversal of the pattern. Second, the higher the green candle closes into the red candle the more prominent the reversal is for this pattern. Lastly, the greater the gap down from the prior day’s close the stronger the reversal. It is also important to note that the day before the piercing candle appears, the daily candle should have a fairly large dark red body to signify a strong down day.

What does the candlestick piercing pattern indicate is happening in the markets?
This pattern indicates that the stock has shifted from a declining price trend to a rising price trend. The theory behind the appearance of this pattern indicates that the bears have been in control of the stock (in the downtrend) and then the stock opens below the close of the first candle and the bulls take over. Basically, if you see this pattern, it is a signal to buy the stock and ride the increasing price up for a profit. Investors can maximize any profit they obtain when seeing this pattern. This is due to the fact that this pattern appears at the beginning of a trend so it also appears right when the stock shifts from a declining pattern to a rising pattern.

Many investors say that the bullish piercing pattern is most easily detected when looking at Japanese Candlesticks stock charts. Investors should also learn about the other major candlestick signals such as the doji candlestick chart, the bearish engulfing pattern, the candlestick hammer signal, and the inverted hammer candlestick. There are other important signals in addition to these for investors interested in trading the stock market using candlestick analysis. Learn how to increase your profit though candlestick trading online and join me in my 2-Day Trading for Profits Online Training Clinic.

Continue your Japanese Candlestick education and read about the dark cloud cover reversal pattern.

What does the hanging man candle indicate is happening in the markets?
This signal indicates trend exhaustion and suggests a bearish reversal. The long lower shadow of this signal indicates that sellers are stepping into a trend. The price opens higher after a strong up-trend has been in effect but it then starts to move lower as the bears take control. The bulls however still have control and the price is increased at the high end of the trading range, thus creating a small real body. While the bulls were able to keep the price high, selling was still apparent with the bulls losing strength, and a reversal may occur. The lower open or black candle the following day confirms that selling is happening. Basically, even though the sellers brought the market very low, in the end the buyers brought the close price back up near the market open price. This signal indicates that buyers are losing control and bearish traders are gaining strength.

The 12 major candlestick signals are very important to learning how to play the stock market. In addition to the hanging man, you should learn about other signals such as the doji candlestick chart, the bullish engulfing pattern, the bearish engulfing pattern, and the inverted hammer candlestick. Not only is it important to be able to detect when a signal is occurring but it is also important to understand what each signal indicates may occur in the markets. Continue to learn to increase your profit through candlestick trading online and join me in my 2-Day Trading for Profits Online Training Clinic.

Continue your Japanese Candlestick education and read about the candlestick peircing pattern.