Bearish Kicker Candlestick Pattern – Strengths And Trading Ideas

Bearish kicker candlestick pattern: It is often observed that market participants utilize technical analysis as a means of speculating and predicting short-term movements in stock prices. Technical analysis encompasses a range of methods for analyzing the market, including the candlestick pattern method, which is commonly employed to forecast stock price movements.

In this article, we will try to understand one such candlestick pattern called the bearish kicker candlestick pattern.

Bearish Kicker Candlestick Pattern

What is the Bearish Kicker Candlestick Pattern?

The bearish kicker candlestick pattern is a two-candlestick pattern which indicates a strong reversal. This pattern when formed in an uptrend indicates a strong bearish reversal. 

The first candle is a green candle along the trend and the second candle is a red candle that opens with a gap down and closes further down. 

The bearish kicker candlestick pattern may form in any trend but the indication of bearish reversal is the strongest when this pattern is formed in an uptrend. Market participants can look to book profits if this pattern appears in a stock they hold or also look for a fresh shorting position.

Bearish Kicker Candlestick Pattern – Formation

Two conditions need to be filled in for a two-candlestick pattern to be called a bearish kicker pattern:

Condition 1 – The first candle should be bullish (green candle). The candle must have a considerably bigger body to its wicks if there are any.

Condition 2 – The second candle must open with a gap down and close further down. Thus forming a bearish candle (red candle). This candle must also have a bigger real body compared to its wicks.

It is preferable for this pattern to be formed in an uptrend as the indication derived from this pattern will have a higher probability of succeeding.

Bearish Kicker Candlestick Pattern – Meaning

When the price of a stock is in an uptrend, the first candle of this pattern is green. This is due to high buying pressure in the market. Then at some point, there is a massive increase in the selling pressure due to which the second candle opens with a gap down.

This high selling pressure continues for the duration of this candlestick and thus forms a red candle. Thus, the formation of this pattern is generally seen with an increase in sellers driving the price further down.

Bearish Kicker Candlestick Pattern – Strengths

There are a few situations where the formation of the bearish kicker candlestick pattern gives a stronger bearish reversal indication. 

• Formation near a resistance zone: The security price will likely decrease because sell orders might already be present in the zone and this pattern will attract more sellers.
• Formation at an all-time high: When a market is at an all-time high, there’s a possibility that the price will go down, either for a short duration or completely enter a downtrend. This is because traders are often anxious when the price is high and may consider exiting the trade to secure their profits. This sentiment is usually triggered when a specific pattern forms while the price is at an all-time high.
• Formation with the RSI being in an overbought zone: this is a strong indication as the RSI being in an overbought zone and the formation of this pattern brings in more sellers in the market. Hence the price might see a downward momentum.

Bearish Kicker Candlestick Pattern – Trading Ideas

Traders must ensure that the prior trend before the formation of this pattern is an uptrend. Once this pattern is formed in an uptrend, the following are the guidelines to take a trade:

• ENTRY: Traders can take a sell entry when the security price starts trading below the closing price of the second candle in this pattern.
• TARGET: Traders can consider exiting a trade when the price of the security approaches the immediate support zone. At this level, they can also choose to book partial profits and hold the remaining position until the next opportunity arises.
• STOP LOSS: Traders can place the stop loss near the high price of the first candle of this pattern.

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Bearish Kicker Candlestick Pattern – Example

In the above one-hour chart of KOTAK MAHINDRA BANK, we can observe that the bearish kicker candlestick pattern was formed after an uptrend. As discussed in the article, the price went downwards after the formation of this pattern.

At the time of the formation of this pattern, traders could have taken a sell entry at Rs. 1907.90 and the stop loss was at Rs. 1977.

Read more: Bullish Thrusting Candlestick Pattern

Conclusion

In this article, we understood that the bearish kicker candlestick pattern is an indication of a potential bearish reversal pattern. We also understood how to identify a bearish kicker candlestick pattern as well as the reason behind the formation of this pattern. 

Traders should not take a trade solely based on the formation of this pattern but also include other technical tools and indicators to predict the future movement of the price and then place a trade. In situations where the trade goes against the analysis, placing a stop loss would minimize the losses.

Written by Praneeth Kadagi

By utilizing the stock screener, stock heatmap, portfolio backtesting, and stock compare tool on the Trade Brains portal, investors gain access to comprehensive tools that enable them to identify the best stocks, also get updated with stock market news, and make well-informed investments.

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