A bullish kicker pattern is a two-bar candlestick pattern in which a strong bearish candle in a downtrend is followed by a strong bullish candle that opens with a gap up, at or above the first candle's open signaling a trend reversal. The bullish kicker pattern signals a sudden reversal from a downtrend to an uptrend, usually after news such as an earnings report changes sentiment overnight.
Bullish kickers are rare, yet technical analysts treat the bullish kicker as one of the most powerful reversal signals in candlestick analysis. Traders use the bullish kicker candlestick pattern in three steps: identify the gap between the two candles, wait for price to trade above the second candle's high, and place a stop-loss below the second candle's low.
What Is a Bullish Kicker Candlestick Pattern? (what-is-a-bullish-kicker-candlestick-pattern)
A bullish kicker candlestick pattern is one of the two-bar reversal candlestick patterns in candlestick charting, and a bullish kicker turns a downtrend into an uptrend over the span of just two candles. The bullish kicker is the bullish version of the kicker candlestick pattern, and the bearish kicker is the opposite version.
The bullish kicker shows a sudden shift in sentiment: sellers control the first candle, and buyers control the second candle from the open to the close. A shift in market sentiment that sharp usually needs major news such as an earnings report, FOMC Decisions or other significant news, which is why traders treat the bullish kicker as one of the most powerful reversal signals available.
Bullish kickers are rare, and when a bullish kicker appears, money managers and technical analysts take notice. A bullish kicker carries more weight when the bullish kicker forms in an oversold market or at a support level, where the downtrend has already run for some time.
How Do You Identify a Bullish Kicker Candlestick on a Chart? (how-do-you-identify-a-bullish-kicker-candlestick)
A bullish kicker candlestick has five rules, and all five rules must be present on the chart:
Price is in a downtrend before the first candle forms.
The first candle is a strong bearish candle that continues the downtrend.
The second candle opens with a gap up, at or above the first candle's open.
The two candle bodies have no overlap.
The second candle closes as a strong bullish candle, well above the second candle's open.
The gap up is the rule that separates a bullish kicker from other two-candle reversal patterns. The first candle closes below the first candle's open, so a second candle that opens at or above the first candle's open has gapped up by at least the full size of the first candle's body.
Traders differ on how far the bullish kicker gap must go. The common rule only requires the second candle to open at or above the first candle's open, while stricter traders want the second candle to open above the first candle's high, so that even the shadows (wicks) of the two candles do not overlap.
The classic Japanese version, called the kicking pattern, is stricter still. In a bullish kicking pattern, both candles are marubozu candles (candles with no shadows), so the gap separates the full price range of the first candle from the full price range of the second candle.
Bullish Kicker Price Action: Why Does the Bullish Kicker Pattern Form? (why-does-the-bullish-kicker-pattern-form)
To explain why a bullish kicker forms, we need to look at trader psychology of the price action across the two candles. During the first candle, sellers are in full control: price falls through the session, the first candle closes near its low, and short sellers add to their positions in the direction of the downtrend.
Between the two sessions, certain events like news of a strong earnings report or a major announcement changes market sentiment. Price opens the second session with a gap up above the first candle's open, so almost every short seller who sold during the first candle is now holding a losing position.
Trapped short sellers then rush to close their sell positions by buying back their positions, which is called short covering. Short covering adds buying pressure on top of the new buyers who reacted to the news, and the combined buying pushes the second candle to close as a strong bullish candle.
Where Does the Bullish Kicker Appear: Forex, Shares or Indices? (where-does-the-bullish-kicker-appear)
A bullish kicker needs a large opening gap, and the market you trade decides how often a gap that large appears. Price must gap up by at least the size of the first candle's body, because the first candle closes below its open and the second candle has to open at or above that open.
Shares gap overnight on earnings reports and company news, which makes daily share charts and share CFDs the most common place to find a bullish kicker. Index CFDs with a daily session break can also open with a gap after major economic news.
Spot forex trades 24 hours a day from Monday to Friday, so a daily forex candle usually opens at or very near the previous close. On currency pairs, a gap large enough to form a bullish kicker mostly appears at the Monday open, after news breaks over the weekend.
On an intraday share chart, a bullish kicker can only form across the session open, where the overnight gap sits, because each candle inside a continuous session opens where the last candle closed.
How Do You Trade the Bullish Kicker Pattern? (how-do-you-trade-the-bullish-kicker-pattern)
Trading the bullish kicker pattern comes down to four decisions: where to enter a long position, how to confirm the signal, where to place the stop-loss and where to set the profit target.
Where to Enter a Bullish Kicker Trade
Most traders wait for the third candle (the candle after the pattern) to trade above the high of the second candle before entering a long position. A move above the second candle's high shows that buyers are still in control after the gap day.
Some traders prefer to wait for a pullback into the gap before entering a long position, because price looks like it has moved too far, too fast. A strong bullish kicker often does not pull back, so traders who wait for a pullback can miss the trade entirely.
How to Confirm the Bullish Kicker With Volume
High volume on the second candle adds confirmation to a bullish kicker, because heavy volume shows that many traders took part in the reversal. A bullish kicker on low volume has a higher chance of failing, since fewer buyers and short sellers are behind the gap.
Spot forex has no central exchange volume, so MT4 and MT5 show tick volume, which counts the number of price changes in each candle. Traders read tick volume the same way, and a second candle with tick volume well above the recent average adds confirmation.
Where to Place the Stop-Loss on a Bullish Kicker
Traders place the stop-loss for a bullish kicker just below the second candle's low. Price that falls back into the first candle's body fills the gap, and a bullish kicker that fills the gap has failed.
The second candle of a bullish kicker is usually tall, so the distance from an entry above the second candle's high down to the stop-loss can be large. To keep the same money risk on a wide stop-loss, traders reduce the position size.
News-driven gaps also bring wider spreads and slippage around the open, so a stop-loss can fill at a worse price than the level set on the trading platform.
How to Set a Profit Target After a Bullish Kicker
The bullish kicker gives no built-in profit target, so traders set the profit target at the nearest resistance level above the entry. Before entering the trade, compare the distance to the resistance level with the distance to the stop-loss, because you need a risk-reward ratio above 1:2.
Bullish Kicker Pattern Example (bullish-kicker-pattern-example)
A worked example with round numbers on a daily chart shows how a bullish kicker trade fits together from the pattern to the exit.
Candle 1: Price has fallen for several sessions in a downtrend. The first candle opens at 100 and closes at 96, a strong bearish candle that continues the downtrend.
Candle 2: News released after the close changes sentiment. The second candle opens at 101 with a gap up above the first candle's open of 100, trades no lower than 100.50 and closes at 106. The two candle bodies have no overlap, so the two candles form a bullish kicker.
Candle 3: The third candle trades above the second candle's high of 106.40, and the trader enters a long position at 106.50. The stop-loss goes just below the second candle's low at 100.30, and the profit target goes at the nearest resistance level at 115.
The tall second candle puts the stop-loss 6.20 points from the entry, so the trader can only hold 16 units to keep the loss at 100 if the stop-loss is hit. A trader who ignored the wide stop-loss and used a normal position size would lose far more than 1% of the account on a failed bullish kicker.
What Are the Limitations of the Bullish Kicker Pattern? (what-are-the-limitations-of-the-bullish-kicker-pattern)
Bullish kickers are rare, so a trader who waits only for bullish kickers will have very few trades.
A bullish kicker completes after price has already moved sharply, so the stop-loss is wide and the risk-reward ratio to the nearest resistance level can be poor.
A bullish kicker depends on news, and a second piece of news can reverse the gap as fast as the first piece of news created the gap.
A gap fill back into the first candle's body cancels the bullish kicker signal.
Spot forex rarely produces a bullish kicker outside the Monday open, so forex traders see the bullish kicker far less often than share traders.
The bullish kicker gives no profit target, so the exit depends on resistance levels the trader has to find separately.
Bullish Kicker vs Bearish Kicker: What Is the Difference? (bullish-kicker-vs-bearish-kicker)
The bearish kicker is the mirror image of the bullish kicker. A bearish kicker forms after an uptrend: a strong bullish candle is followed by a gap down, and a strong bearish candle opens at or below the first candle's open, signalling a reversal from an uptrend to a downtrend.
Both kicker patterns follow the same identification rules, with every direction reversed.
FAQ
Is the bullish kicker pattern reliable?
Technical analysts consider the bullish kicker one of the most reliable reversal patterns in candlestick analysis, especially when news drives the gap and the bullish kicker forms in an oversold market. A bullish kicker can still fail, so traders wait for the third candle to trade above the second candle's high, check volume and place a stop-loss below the second candle's low.
What is the difference between a bullish kicker and the kicking pattern?
The kicking pattern is the stricter classic version of the bullish kicker. A bullish kicking pattern uses two marubozu candles with no shadows, while a bullish kicker only needs the second candle to open at or above the first candle's open with no overlap between the candle bodies.
What happens if price fills the gap after a bullish kicker?
A gap fill means price has fallen back into the first candle's body, and a bullish kicker that fills the gap has failed. Sellers have taken back the price range the gap skipped, so traders exit long positions and treat the bullish kicker signal as cancelled.
