Bearish Kicker

The bearish kicker is quite possibly the most powerful reversal pattern to exist. The two candle pattern starts with a green day, followed by a gap down, with strong seller presence closing the second candle red. This pattern is often associated with some sort of catalyst that causes the abrupt sentiment shift.

The extremely rapid change in sentiment from bullish day 1 to very bearish the next is what gives this pattern its strength. Any buyers from the previous day are now trapped, and will have to sell to close their positions, only increasing the selling pressure.

This example from SPY daily on 8/19/2022 occurred after a 2 month, 70 point rally. Buyers were hopeful that the 6 month downtrend was ending; only to get trapped in a bearish kicker. The selling that followed was relentless.

Then again, nearly a month later on 9/13/2022, aggressive dip buyers got obliterated in a second bearish kicker, followed by more relentless selling. From the first bearish kicker, the selling continued for nearly 40 trading days, resulting in a −19% drawdown on SPY.