Tweezers Candlestick Pattern- Best Way to Use Tweezers [2023]
Tweezers candlestick patterns are common in both bull and bear markets.
The tweezers candles indicate that prices were held twice at the same level or very close to it. Tweezer bottom means sellers were unable to push the stock lower, while tweezer top means bulls were unable to push prices higher at the peak.
Tweezers thus represent very short-term levels of support and resistance.
Tweezer candlesticks, along with other price action indicators, are commonly used to forecast trend reversals.
Table of Contents
- Tweezers Candlestick Pattern -Tweezer Bottom
- Tweezers candlestick pattern – Tweezer Top
- Best Tips For Trading
Tweezers Candlestick Pattern -Tweezer Bottom
The Tweezer bottom pattern indicates a potential bullish reversal. pattern is clearly visible when the low of the day of two candlestick bodies coincide with each other in a row.
However, if the low of the day is marked by a shadow of the candles, pattern is valid if the price reverses from the same level.
How to Identify ?
The tweezer bottom pattern is fairly simple to recognize, and you may see it frequently in candlestick charts.
Just try to remember the following characteristics while trying to recognize the pattern-
| Number of candles | Two |
| Prior Trend | Downtrend |
| Appearance | Two consecutive candles of the same low price |
| Upper Shadows | It doesn’t matter. |
| Color of candles | It makes no difference. |
Trading Strategy
Trading the tweezer bottom candlestick pattern is simple and often results in a large profit as part of a bullish reversal.
However, there are other ways to trade depending upon various scenario’s-
- Prices are in an uptrend and pattern appears at the first retracement in such cases buying in the direction of the major trend is successful 68% of the time, especially if the next day is a gap up.
- If the major trend is down, pattern appears and prices open gap up the next day, there is a 73% chance of a bullish trend reversal; prices may pause briefly before continuing to rise.
- If prices break the minor support level created by tweezer lows in a downtrend instead of rising, there is a very high likelihood of trend continuation, and failed patterns often result in a very good risk to reward trade, so bearish continuation is very likely in this case.
Psychology Behind Pattern
The psychology behind the pattern is as follows:
The market is already in a downtrend, given the amount of pressure from bears; however, when a tweezer bottom pattern appears, it indicates that two consecutive days of price action lead to the same low and bears are unable to break this support; and there appears to be a good chance for bulls to push price higher, potentially signaling a bullish trend reversal.
Best Tips For Trading
- Candle body can be used as a weightage factor for the tweezer bottom pattern; taller bodies often indicate a greater possibility of reversals.
- Candles with long upper wicks/shadows are also good indicators of trading opportunities with countertrend movement.
- Use volume candle chart to gauge sentiment of market and directional forecast
- Check for market opening gaps, which are frequently very good indicators of which direction a price move is most likely to take.
- If prices move sideways near the formation of a tweezer pattern, there is a 50% chance of a breakout on either side.
Tweezers candlestick pattern – Tweezer Top
The Tweezer top pattern is a bearish reversal candlestick pattern.
A tweezer top pattern is said to form when the high of the day of two candlestick bodies coincide with each other in a row.
If the price reverses from the same level and the high of the day is marked by a shadow of the candles, the tweezer top candlestick pattern is valid.
How to Identify ?
Tweezer top patterns are frequently seen at the top of an uptrend, but they can also be seen during trend continuation or in a downtrend. To spot them quickly, refer to the table below.
| Number of candles | Two |
| Prior Trend | Uptrend |
| Appearance | Two successive candles with the same high price |
| Upper Shadows | It doesn’t matter. |
| Color of candles | It makes no difference. |
Trading Strategy
The tweezer top pattern must be traded in accordance with the price action preceding the pattern, as well as taking note of how the pattern unfolds.
Taking both factors into account, let us examine three scenarios and how to trade tweezer top in each of them –
- If pattern appears during an uptrend and the price closes below the pattern’s low the next day, there is a 66% chance of trend reversal.
- If pattern is visible during an uptrend and prices move higher than the pattern itself in the following days, the trend has a 60% chance of continuing. Furthermore, if there is a gap up opening the next day, the chances of the trend continuing increase by up to 70%.
- Pattern formation at retracement of a downtrend and prices gap down the next day, there is a greater chance of bearish continuation.
Psychology Behind Pattern
The psychology behind the tweezer top candlestick pattern can be explained as below-
When prices are in an uptrend, bulls are pushing them to new highs. When bulls try to force the price higher but are unable to break through a resistance two days in a row, bears take over and attempt to move prices lower, which may result in a bearish reversal.
Best Tips For Trading
- The candle body can be used as a weightage factor for the tweezer top pattern; taller bodies frequently indicate a higher likelihood of reversals.
- Candles with long lower wicks/shadows are also good indicators of trading opportunities with countertrend movement.
- After the pattern is formed, volume can be a good indicator of price action change.
- Market opening gaps can be extremely useful in forecasting the price movement following the pattern.
- Sideways price movement after the pattern is formed can be a 50% chance of either side breakout, wait for the breakout in such cases.
Key Takeaways
- When the tweezers appear in a row, there is a higher likelihood of reversals.
- Swing traders should pay close attention to the price action that occurs immediately after the tweezers candles.
- Tweezer bottoms and tweezer tops both perform better in a bear market than in a bull market.
- Tweezers candlesticks price action, psychology, and working configuration are nearly identical to that of the double bottom and double top chart pattern; both serve as short-term support and resistance levels, with breakouts providing a clear indication of future price movement.
- Combine the tweezers candlesticks with larger time frame chart patterns to get the most out of it.
Frequently Asked Questions
What are Tweezers candlesticks?
Tweezers candlesticks are reversal candlestick patterns formed by two candles
How you trade tweezer top?
If next day of pattern formation candle closes below pattern, it confirms bearish reversal thus place a short trade.
How you trade tweezer bottom?
If next day of pattern formation prices move upwards pattern formation means bullish reversal and hence place long trade.
What does tweezer bottom candlestick mean?
It represents short term support and may act as a bullish reversal pattern.
What does tweezer top candlestick mean?
It represents a short pause in bullish rally, and sometimes if price action follows they act as a bearish reversal patterns.
At Bulls Arena Trading
info@bullsarenatrading
New Delhi
India
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