Bullish Kicking

The bullish kicking is a rare Japanese candlestick pattern that makes money in the stock market when traded as intended, according to my multiple-decade backtest.

The pattern rarely occurs in the forex and crypto markets, so the data has been omitted.

But before you pass on the bullish kicking, what it lacks in frequency, it makes up in profitability.

If this interests you, let’s learn how to trade this bullish kicking candlestick using a data-driven trading strategy.

What Is a Bullish Kicking Candlestick Pattern?

Bullish Kicking Candlestick Pattern © Analyzing Alpha
Bullish Kicking Candlestick Pattern

The bullish kicking is a two-bar pattern that most traders consider a bullish reversal pattern.

The name comes from the sharp move, or kick, in the opposite direction.

But before we dive into the history of these kicking candlesticks, let’s learn how to identify them on our candlestick charts.

How to Identify the Bullish Kicking Candlestick Pattern

Bullish Kicking Candlestick Pattern on the American Realty Investors (ARL) April 23rd, 2019 daily chart
Bullish Kicking Candlestick Pattern on the American Realty Investors (ARL) April 23rd, 2019 daily chart

The following are the requirements for a valid bullish kicking pattern:

  • The first candle must be a bearish marubozu.
  • The second candle must be a bullish marubozu.
  • There must be an upside gap between the two candles.

We see the bullish kicking on the American Realty Investors (ARL) April 23rd, 2019, daily chart.

The first-day candlestick is a red marubozu followed by a gap into a bullish marubozu. There is no trend requirement for the kicking candlestick patterns, so we’ve fulfilled all the requirements for a valid pattern.

Now that we know how to identify this bullish candlestick reversal pattern let’s learn how to kick our profits into the stratosphere.

How to Trade the Bullish Kicking Pattern

The bullish kicking is traded optimally using a bullish candlestick reversal setup in the stock market. There is insufficient data to determine the best setup for the crypto and forex markets.

And since the most profitable setup is the same one recommended by traditional technical analysis, let’s cover this bullish setup now.

Bullish Kicking Bullish Candlestick Reversal Trade Setup

Bullish Kicking Bullish Trade Setup on the HSBC Holdings (HSBC) daily chart.
Bullish Kicking Bullish Trade Setup on the HSBC Holdings (HSBC) daily chart.

We see two marubozu candles in the requisite order –  a bearish red marubozu candle followed by its bullish green marubozu counterpart. With the pattern identified, it’s time to look bullish.

I call this a bullish candlestick reversal instead of just a bullish reversal, as the pattern doesn’t require a trend.

Traditional traders enter long on a break of the high of the second marubozu and place a stop loss below the low of the first marubozu.

While this trade was profitable for the HSBC trader, there’s still a better way – it’s a subtle difference, but again, we always want to know the optimal trading setups, right?

The best bullish kicking trading strategy is to treat the pattern as bullish as we just discussed, but instead to go long at a break of the close – not the high, with a stop loss set below the low of the first day’s bar.

Speaking of profits and optimization, what do our backtest results tell us about the best bullish kicking trading strategy?

Does the Bullish Kicking Pattern Work? (Backtest Results)

Using the following rules, I backtested the bullish kicking candlestick pattern on the daily timeframe in the crypto, forex, and stock markets.

  • A close above the 50-day SMA constitutes an uptrend.
  • I tested risk-reward ranges from 1 to 5. 
  • The optimal risk-reward ratio is selected using profit per bar.
  • Entry and exits are discussed in the how-to trade section above.
  • Confirmation must occur within three days of the pattern signal.

Similar Candlestick Patterns

Many candlestick patterns are similar to bullish kicking patterns.

Bearish Kicking vs. Bullish Kicking

Bearish Kicking Candlestick Pattern Illustration © Analyzing Alpha
Bearish Kicking Candlestick Pattern Illustration

The bearish kicking candlestick pattern is the exact opposite of the bullish kicking. Each pattern requires two marubozu candlesticks with a gap between them. The bearish kicking starts with a white candle on the first day, followed by a black candle on the second.

Whereas, as we just discussed, the bullish requires a bearish marubozu followed by a white marubozu gapping up.

Bullish Kicking by Length vs. Bullish Kicking

The bullish kicking by length and the bullish kicking are the same pattern – they’re just different trading strategies.

Let me clarify this.

The pattern requires two marubozu candlesticks moving in opposite directions with a gap between them. But instead of the second candlestick dictating whether or not the pattern is bearish or bullish, it’s the length of the larger marubozu.

For instance, if the first day is bearish and has a larger marubozu than the next day, the pattern is considered a bearish kicking by length. 

The Bottom Line

The bullish kicking infrequently occurs in the stock market and rarely on the daily chart in the forex and crypto markets. The pattern is best traded as a bullish candlestick reversal, expecting a longer-term move.

Instead of attempting to identify and trade this rare pattern, it’s likely a better decision to study the most common candlestick patterns.

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