What Is Kicker Pattern?
The Kicker pattern is a two-candlestick formation used in technical analysis that signals a sharp and sudden reversal in market sentiment. This pattern is characterized by a significant price gap in the direction opposite to the preceding trend, with the second candlestick opening beyond the previous day's close and continuing to move strongly in the new direction. The Kicker pattern is often considered a powerful indicator due to the conviction it suggests among market participants, leading to an abrupt shift in price action.
History and Origin
The origins of candlestick patterns, including the Kicker pattern, trace back to 18th-century Japan, where a rice merchant named Munehisa Homma developed a method for tracking rice prices. His insights into the influence of emotion on price movements laid the foundation for modern candlestick charts. These techniques remained largely confined to Japan until the late 1980s when they were introduced to the Western world. Steve Nison is widely credited with popularizing Japanese candlestick charting techniques in Western financial markets through his influential book, "Japanese Candlestick Charting Techniques," first published in 1991.5 The book provided comprehensive explanations of various patterns, including those indicating strong reversals like the Kicker pattern.
Key Takeaways
- The Kicker pattern is a two-candlestick reversal formation marked by an abrupt and significant price gap.
- It signifies a sudden shift in market sentiment and a strong directional change.
- The first candle moves with the prevailing trend, while the second opens with a gap in the opposite direction and continues that movement.
- The Kicker pattern is considered one of the most reliable reversal signals in technical analysis.
- Confirmation from subsequent price action or other indicators is often sought, despite its inherent strength.
Formula and Calculation
The Kicker pattern does not involve a specific mathematical formula or calculation. Instead, it1234