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Bullish Kicking Candlestick Pattern

bearish candlestick followed by a gap up and a bullish candlestick

The kicking candlestick pattern is a two candlestick reversal pattern that begins a new trend opposite to the trend previous. A bullish kicking pattern occurs after a downtrend. The first day candlestick is a bearish marabozu candlestick (a bearish candlestick with little to no upper or lower shadow, where the price opens at the high of the day and closes at the low of the day). The second day gaps up massively and opens above the previous day’s opening price. This second day candlestick is a bullish marabozu (a bullish candlestick with little to no upper or lower shadow, where the price opens at the low of the day and closes at the high of the day). There is a gap or, as the Japanese refer to it, a window between day one’s bearish candlestick and day two’s bullish candlestick.

Psychology of Bullish Kicking Pattern

graphic shows that the gap up is a major change in direction

With a bullish kicking candlestick pattern the first day’s bearish candlestick is a sign that bears are completely in charge. However the large gap up the next day is a substantial change in market psychology. The bulls were able to eliminate all losses obtained by the bears the previous day plus add further gains with the gap up and long bullish candlestick. What makes this reversal so potent is that an entire day of bearish shorts placed on day one is now losing money. When these shorts capitulate and are forced to buy back these shorts, even more buying pressure will be added to the market pushing prices up even further.

Bearish Kicking Candlestick Pattern

bullish followed by a gap down and a bearish candlestick

A bearish kicking pattern occurs after an uptrend and signals a reversal for a new downtrend. The first day candlestick is a bullish marabozu candlestick. The second day gaps down massively and opens below the previous day’s opening price. This second day candlestick is a bearish marabozu. There is a gap between day one’s bearish candlestick and day two’s bullish candlestick.

Psychology of Bearish Kicking Pattern

graphic shows that gap down is a major change in trend

The bearish kicking candlestick pattern signifies a massive change in market sentiment. The first day of the pattern is a strong bullish candlestick signaling the bulls are in charge. Nevertheless, the next day is a complete reversal when bears push prices past the previous day and then some. All longs placed on the first day’s bullish candlestick are now losing money and when these bulls decide to take their losses, even more selling will take place pushing prices down even lower.

Bullish Kicking and Bearish Kicking Candlestick Chart Example

a candlestick chart showing both a bullish kicking pattern and a bearish kicking pattern

The chart above of the Silver ETF (SLV) shows both a bullish kicking candlestick pattern starting a new uptrend and then a bearish kicking pattern starting a new downtrend. The bullish kicking pattern starts with a bearish candlestick. The following day is a complete reversal when a large gap up and bullish candlestick appears. By the close of the bullish candlestick on the second day of the bullish kicking pattern, all traders from the previous three days who went short are now in losing trades. When those traders buy to cover their shorts, the buying pressure should push prices even higher, which on the chart above did indeed happen. The bearish kicking candlestick pattern on the same chart above occurred after an uptrend and subsequent period of consolidation. The first day of the bearish kicking pattern was a bullish candlestick. The second day was a bearish candlestick that gapped down on the opening past the open of the first day’s bullish candlestick. It is important to note that all traders on the previous day’s bullish candlestick that went long are now in a losing trade. In fact, the second day of the bearish kicking candlestick pattern was such a large bearish candlestick, that any trader that went long on the previous nine days and was still holding their long position would now be in a losing trade; that is a lot of traders who will need to sell to get out of their long position. A steep downtrend on the chart above illustrated the selling pressure of those traders who sold out of their losing trades.

Works Referenced

  1. Kirkpatrick II, C.D., & Dahlquist, J.R. (2010). Technical Analysis: The Complete Resource for Financial Market Technicians (2nd ed.). Upper Saddle River, NJ: FT Press.
  2. Rockefeller, B. (2011). Technical Analysis For Dummies (2nd ed.). Hoboken: John Wiley & Sons.
  3. The Pattern Site. (2008). Bulkowski's Measure Rule. Retrieved June 1, 2012, from http://thepatternsite.com/measure.html