Bearish Kicker
Reference values based on Bulkowski's "Encyclopedia of Chart Patterns". Data is primarily from U.S. markets and may differ for other markets.
One of the most powerful reversal signals, consisting of two candlesticks. After a large bullish candle, the next day opens with a large gap down to form a large bearish candle. The second candle opens at or below the first candle's open, completely negating the previous day's price action. Often accompanied by dramatic fundamental changes (negative news, policy changes, etc.), indicating an extremely strong bearish reversal.
Enter short at the open of the next candle after the second large bearish candle is confirmed. Or consider a market entry when the second candle opens significantly below the previous day's open.
Project 2-3 times the second bearish candle's range (open minus close) downward from the close. Kicker patterns can generate large moves, so set wider profit targets.
Place a stop-loss slightly above the second bearish candle's open (upper edge of the gap). If the gap is filled, consider the pattern failed.
Significantly increased volume on the second bearish candle is critical. A volume surge reflects the market's reaction to fundamental changes, greatly enhancing pattern reliability.