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.
In order for the Bearish Engulfing signal to be valid, the following conditions must exist:
1.The stock need not be in a definite downtrend before this signal occurs.
2. 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.
3.The stock need not be in a definite uptrend before this signal occurs.
4.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.
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.
Pro KiT Chart shows the confirm Buy Signal after Kicker Signal.