What are Kicker Signals (Bullish and Bearish Kicker Signals)

Many traders consider the Kicker signal a powerful formation. It is an indication of increased market volatility and trader sentiments as a result of significant announcements that affect the financial markets. This article will help you to understand the dynamics of Kicker Signals in binary options trading.

 

WHAT IS THE KICKER SIGNAL

The Kicker signal demonstrates a severe change in the direction of the price. Something has occurred to suddenly change the investor sentiment. Usually a breaking financial news is the reason of this dramatic move. The signal denotes such a change in the current direction that the new trend will persist with strength for a long time.

 

BULLISH AND BEARISH KICKER SIGNALS

The bullish kicker signals form from at least two candle patterns. The first candlestick pattern opens and moves along the same downward trend as the prevailing trend. This candlestick typically does not feature any significant wick on the upper or the lower body.

Meanwhile, the second candlestick starts at the same open price as the first one but moves counter-trend. Under bullish sentiments, the price movement of the underlying asset does not reverse back to the trading range of the previous day. Bullish kickers form following a major event that significantly impacts on the markets. A downward price movement then affects the direction of the kicker.

The bearish kicker signal forms when the open price is at the same point or below the bullish formation of the previous day’s open price. During such a formation, the prices continue to decline further.
kicker signals sample

Following a significant event, the price trends will usually change dramatically. The kicker signifies the price reversal and is an indication that this new price movement will be strong and will last for a substantially long time. It is important to look out for those rare incidences when the prices of the next day reverse back; this is an indication to exit the market immediately to avert any losses.

In summary, the kicker signal forms when:

  • The price movement goes against the opening price
  • The open prices for the first and second day of trading are similar
  • Surprise events take place prior to or after the financial markets are opened

Note that trends do not play any significant role in the formation of a kicker. It is also worthwhile noting that the prevailing prices do not usually revert to the trading range of the previous day.

To recognize the formation of a kicker signal, traders are required to monitor the candle formation of the previous day as the open and close price proceed in the same direction as the prevailing trend.

 


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