Notice the bullish Kicker in Celgene Corp. In this case it was earnings announcement that kicked the prices in the opposite direction. As you can see, CELG had a pretty good run from that point on.

Kicker Signal

 

 

 

 

 

 

The Kicker can be a bullish Kicker or a bearish Kicker. It need not necessarily have a preceeding trend to it. Some traders call it THE most powerful candlestick signal.

 

Criteria

In order for the Bullish Kicker signal to be valid, the following conditions must exist:

  • The stock need not be in a definite downtrend before this signal occurs.

  • The first day of the signal must be a long black body. The second day must be a long white candle opening above the open of the previous day. An ideal Kicker will have a GAP between the two candles.

 

In order for the Bearish Kicker signal to be valid, the following conditions must exist:

  • The stock need not be in a definite uptrend before this signal occurs.

  • The first day of the signal must be a long white body. The second day must be a long black candle opening below the open of the previous day. An ideal Kicker will have a GAP between the two candles.

 

The following Figure shows a Bullish and Bearish Kicker formation. These signals are usually formed because of some after hour news regarding the company. It could be either an earnings report, an analysts upgrade/downgrade, a stock split announcement or a FDA decision on a drug. The news is irrelevant for a candlestick trader. The candle formation says it all. The candles show an extreme change in investor sentiment. Generally, this sentiment will carry over for many days, if not weeks. Overbought / oversold conditions do not have much effect on the Kicker signal, though it always helps to see a bullish Kicker in an oversold condition and a bearish Kicker in an overbought condition. Always pay heed to the Kicker signal.

Chart courtesy stockcharts.com

Chart courtesy icharts.in

Notice the bullish Kicker in STER. A Kicker signal at exactly the same support level from four days back provided a double bottom possibility. This would have prompted a candlestick trader to enter the position for a good rally.