A kicker pattern is a type of candlestick pattern that predicts a short-term reversal in the direction of an asset’s price trend and signals a change in the balance of power between buyers and sellers. This pattern is likely to occur when there is news either about the company that the asset is tied to or within the industry or economy. This creates a strong sentiment shift as investors adjust their expectations and adjust theirview on a particular asset by either buying or selling the asset.

The pattern itself is usually formed over two candlesticks. The first candlestick is the Warning Candle, which is characterized by a strong move against the current trend. This move is reflective of the market’s initial reaction to the news. The second candlestick is the Confirmation Candle, which is characterized by a sharp reversal of the price trend and expansive range in either direction. The Confirmation Candle indicates which group of market participants is in control after the sentiment shift has occurred and marks the moment traders begin to enter or exit the market.

Traders look for the kicker pattern to predict the start of a trend reversal. If a bullish kicker pattern occurs, the asset is expected to rise from the confirmation candle’s close price. Similarly, if a bearish kicker pattern occurs, the asset is expected to fall from the confirmation candle’s closing price. While the kicker pattern may signal the start of a trend reversal, traders must perform further technical and fundamental analysis to confirm their estimation as the pattern may fail to accurately signal the formation of a new trend.

Kicker patterns are generally reliable, although they are frequently used in combination with other indicators or confirmation signals. Traders should take into consideration potential support and resistance levels, chart patterns, and general market sentiment when identifying kicker patterns. Additionally, it is important to remember that kicker patterns can only predict a temporary reversal in the trend, allowing traders to take a position before the reversal occurs. Therefore, traders should plan to exit the market in the event of a sustained trend in the opposite direction.