Kicker Signal – Bullish

Kicker Signal – Bullish

This kicker signal is the most powerful signal in Japanese Candlesticks and indicates a severe change in investor sentiment in the markets. This signal is formed by two candles of opposite color, with the first candle opening up and moving in the direction of the current trend. The second candle opens up at the same open of the previous day and it heads into the opposite direction of the previous day’s candle. When witnessing the bullish kicker signal, the first candlestick (red or black) closes lower than the open, in the direction of the down trend. Then the open the following day is equal or close to the open the previous day moving in the opposite direction. The price continues to move in the bullish direction and the gap up from the previous day’s close is huge.

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.