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 guessing and predicting short-term movements in stock prices. Technical analysis includes a variety of market analysis methods, including the candlestick pattern method, which is commonly used to predict stock price movements.
In this article, we will try to understand one of the candlestick patterns called bearish kicker candlestick pattern.
Bearish Kicker Candlestick Pattern
What is a Bearish Kicker Candlestick Pattern?
The bearish kicker candlestick pattern is a two candlestick pattern that indicates a strong reversal. This pattern indicates a strong bearish reversal when formed during an uptrend.
The first candle is a green candle that follows the trend, and the second candle is a red candle that opens with a downward gap and then closes further lower.
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The bearish kicker candlestick pattern can form in any trend, but the bearish reversal signal is strongest when this pattern forms in an uptrend. Market participants may take profits or look for new short positions if they see these patterns in the stocks they own.
Bearish Kicker Candlestick Pattern – Formation
For a two candlestick pattern to be called a bearish kicker pattern, two conditions must be met.
Condition 1 – The first candle should be bullish (green candle). A candle should have a much larger body if it has a wick.
Condition 2 – The second candle should open with a lower gap and close with a lower gap. Therefore, a bearish candle (red candle) is formed. These candles should have a larger physical body compared to the wick.
It is desirable for this pattern to be formed in an uptrend, as indicators derived from this pattern have a higher chance of success.
Bearish Kicker Candlestick Pattern – Meaning
When the stock price is in an upward trend, the first candle in this pattern is green. This is due to high buying pressure in the market. Then, at some point, the selling pressure increases so much that a second candle opens with the gap lower.
This high selling pressure continues for the duration of this candle, forming a red candle. Therefore, the formation of this pattern typically manifests itself as prices falling further as sellers increase.
Bearish Kicker Candlestick Pattern – Strength
There are several situations where the formation of a bearish kicker candlestick pattern provides a stronger upside. bearish reversal indicator.
- Formation near resistance zone: The price of the security is likely to fall as there may already be sell orders in the zone and this pattern may attract more sellers.
- Best formation ever: When the market reaches an all-time high, there is a chance that prices may decline for a short period of time or enter a downtrend entirely. This is because traders often get anxious when prices are high and may consider exiting the trade to lock in profits. These sentiments are usually triggered when prices are at all-time highs and certain patterns are forming.
- Formation where RSI is in overbought territory: This is a strong sign that the RSI is in overbought territory and that more sellers will enter the market once this pattern forms. Therefore, the price may show downward momentum.
Bearish Kicker Candlestick Pattern – Trading Ideas
Traders must ensure that the previous trend before this pattern was formed was an uptrend. If this pattern forms in an uptrend, here are some guidelines for trading:
- entry: In this pattern, if the price of the security begins to trade below the closing price of the second candle, a trader can make a sell entry.
- Target: When a security’s price approaches an immediate support zone, a trader may consider exiting the trade. At this level, you can also choose to take a partial profit and hold the remaining position until the next opportunity arises.
- Stop Loss: Traders can set a stop loss near the high price of the first candle of this pattern.
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Bearish Kicker Candlestick Pattern – Example
If you look at the KOTAK MAHINDRA BANK 1-hour chart above, you can see that a bearish kicker candle pattern was formed after the uptrend. As discussed in the article, the price fell after this pattern was formed.
At the time this pattern was formed, traders could have made a sell entry at Rs. 1907.90 and the stop loss was Rs. 1977.
Read more: Bullish Candlestick Patterns
conclusion
In this article, we have understood that the bearish kicker candlestick pattern indicates a potential bearish reversal pattern. We also understood how to identify bearish kicker candlestick patterns and why these patterns are formed.
Traders should not trade based solely on the formation of this pattern, but should also include other patterns. Technical tools and indicators Trade after predicting future price movements. In situations where a trade goes against your analysis, setting a stop loss will minimize your losses.
Written by Praneeth Kadagi
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