Bearish Kicker Candlestick Pattern: A Powerful Reversal Signal for Traders

The Bearish Kicker candlestick pattern is one of the strongest bearish reversal patterns in technical analysis. It suggests an immediate shift in investor sentiment, where sellers take full control after a period of bullish momentum. This candlestick formation is rare, but when it appears, it often leads to a sharp reversal in price.

If you’re looking for a candlestick pattern that predicts aggressive selling pressure, this is one to watch. It’s commonly seen before major market downturns and can be a useful tool when trading stocks, forex, or crypto.

The Bearish Kicker pattern is a two-bar candlestick that signals a sudden change in investor sentiment.

• The first candlestick is a strong, bullish candlestick, showing upward momentum.
• The second candle that opens gaps down significantly and closes strongly bearish, completely ignoring the prior price action.
• There is zero overlap between the two-bar candlestick formation, which is what makes this reversal pattern unique.

This pattern indicates that the stock experienced a rapid shift, often triggered by external factors like earnings reports, economic news, or major market shifts.

The Bearish Kicker candlestick pattern is illustrated below.

• Appears after an uptrend or a relief rally, signaling a reversal in the price.
• Consists of two-bar candlesticks: A long bullish candlestick, followed by a large bearish candlestick that gaps down and shows no overlap.
• The larger the gap, the stronger the pattern, indicating a reversal.
• Works best when volume spikes on the second candlestick, confirming selling pressure.
• It can indicate a change in investor sentiment, often triggered by news or earnings releases.

This candlestick pattern indicates a sharp shift in control from buyers to sellers.

• The first candlestick represents continued bullish momentum, suggesting the uptrend is intact.
• The second candlestick shows a strong gap down with no attempt to recover, signaling that sellers have completely taken over.
• The red candlestick close shows that buyers were caught off guard, forcing many to exit their long positions.
• The lack of overlap between the two candles is crucial. It confirms that the market has completely disregarded the previous day’s white candlestick, showing an overwhelming shift to the downside.

Market Conditions

The Bearish Kicker candlestick pattern is most effective after a sustained uptrend or at resistance levels. It signals a sudden shift in momentum and is often followed by strong downward moves.

Volatility Considerations

• In high-volatility markets, gaps may be exaggerated, making the bearish candle more powerful but also riskier.
• In low-volatility markets, the pattern is more reliable but may require additional confirmation before entering a trade.

• Stop-loss placement: Stop loss should be placed above the high of the first candlestick to limit downside risk.
• Entry strategy: Traders typically enter at the close of the second candlestick or on a slight pullback.
• Profit targets: Use previous support levels or aim for a risk-reward ratio of at least 2:1.

• The second candle retraces after the gap is down: If the price closes higher than the gap, the trading signal weakens.

• Gap fills quickly: A partial or full retracement of the gap suggests that the market isn’t fully committed to the reversal.

• Low volume on the second candle: If volume remains low, the reversal may not be sustainable.

To trade the Bearish Kicker candlestick pattern systematically:

1. Identify a strong uptrend or relief rally before the pattern occurs.
2. Detect a white candlestick, followed by a black candlestick that gaps down and has no overlap with the first candlestick.
3. Confirm with high volume on the second candlestick.
4. Set a stop-loss above the high of the first candlestick.
5. Test the candlestick pattern that consists of these conditions in various market environments before applying it in live trading.

Below is a simple AFL script to detect the Bearish Kicker pattern in Amibroker:

// Bearish Kicker AFL Code for Amibroker

_SECTION_BEGIN(“Bearish Kicker”);

FirstBullish = Ref(Close, -1) > Ref(Open, -1);

GapDown = Open < Ref(Close, -1) AND Open < Ref(Low, -1);

StrongBearish = Close < Open AND Close < Ref(Close, -1);

BearishKicker = FirstBullish AND GapDown AND StrongBearish;

PlotShapes(IIf(BearishKicker, shapeDownArrow, shapeNone), colorRed, 0, High);

_SECTION_END();

This script helps traders spot Bearish Kicker patterns on price charts.

The Bearish Kicker candlestick is one of the strongest bearish reversal signals, indicating a sharp shift in sentiment. 

It consists of a strong bullish candle, followed by a bearish candle that gaps down and shows no overlap, confirming a shift in market direction.

This pattern is highly reliable when combined with volume and price confirmation. Traders use it to enter short positions when selling pressure dominates completely. 

However, like all patterns, backtesting and risk management are crucial before trading it live.

Links to articles about other Candlestick Patterns

1. Doji
2. Hammer
3. Inverted Hammer
4. Bullish Engulfing
5. Bearish Engulfing
6. Morning Star
7. Evening Star
8. Shooting Star
9. Hanging Man
10. Piercing Pattern
11. Dark Cloud Cover
12. Three White Soldiers
13. Three Black Crows
14. Dragonfly Doji
15. Gravestone Doji
16. Spinning Top
17. Marubozu
18. Tweezer Top
19. Tweezer Bottom
20. Bullish Harami 
21. Bearish Harami
22. Rising Three Methods
23. Falling Three Methods
24. Bullish Abandoned Baby 
25. Bearish Abandoned Baby 
26. Bullish Kicker 
27. Bearish Kicker
28. Three Inside Up
29. Three Inside Down
30. Upside Gap Two Crows
31. Mat Hold
32. Upside Tasuki Gap
33. Downside Tasuki Gap