The tweezer top and bottom candlestick patterns are two candlestick trend reversal patterns. Two candlesticks together look like a tweezer. The tweezer top candlestick pattern and a tweezer bottom candlestick pattern are two candlesticks patterns.
Between these two patterns, the tweezer top pattern indicates a short-term bullish reversal and the tweezer bottom pattern indicates a bullish trend reversal. Both of these patterns can be seen often in a candlestick chart.
Why These Patterns are called Tweezers?
A tweezer is a tool commonly used for domestic as well as industrial purposes. It has two legs of equal length. This tool is used to pick up small items which are too small to be picked up by hand.
The tweezer patterns of candlesticks are similar in structure to a tweezer. The tweezer top is made up of two candlesticks that have equal highs.
On the other hand, the tweezer bottom of candlesticks has equal bottoms. The tweezer patterns can be represented by two lines, one upright and the other inverted, both of them have either equal tops or equal bottoms.
This similarity has earned the name tweezer for them.
Read More: 28 Candlestick Patterns You Should Know
Tweezer Top Candlestick Patterns
The tweezer top candlestick patterns are not rare in a candlestick chart and can often indicate a short-term trend reversal.
What is the Tweezer top candlestick pattern?
The tweezer top pattern is formed at the top of a bullish trend. This pattern has two candlesticks, the first one is a bullish candlestick shown in green color and the second one is a red or bearish candlestick. The high of the green candle and the high of the red candle rest on the same or nearly the same level.
Features of Tweezer Top candlestick Patterns
The tweezer top patterns have some special structural features. First, these patterns are formed by two adjacent candles.
Secondly, the first candle has to be a part of an ongoing uptrend. The first candlestick should close higher than the previous candle. As the candle is a part of the ongoing uptrend, the first candlestick appears as a green candle because of its bullishness. This candle may or may not have wicks at the top of the candle.
The structure of the second candlestick is very unique in this pattern. It must have some special features which form this tweezer top pattern. The second candle may or may not have wicks.
But what is most important is that the low of the second candlestick should be equal or nearly equal to the first green candle. This candle is essentially a bearish candle because reversal occurs from the second candle only. The color of the second candle is opposite to that of the first candle.
Structurally, the tweezer top patterns can look somewhat different from one another, but one important feature must be there to make this a valid pattern. The high of the first green candle of this pattern must be equal or nearly equal to the low of the second red candle.
There are other variations of tweezer top patterns than what is shown in the above two diagrams, the structural features should remain the same.
Even in some cases, there are small two to three candles of Doji or Star patterns that can be seen between the two opposing candles of this pattern. These variations are within acceptable limits if the other properties remain the same.
What do the Tweezer Top Patterns tell us?
The tweezer top pattern is a bearish reversal pattern. Therefore it is also referred to as a bearish tweezer pattern.
This pattern forms at the top of the prevailing uptrend. Hence, if this pattern is seen, the trader can assume that the uptrend is over, even if for a short period.
Likely, a trader can also see that this is the top of the prevailing upmove as of the present situation. Hence, the bulls should exit here. At the highs where bulls were rejected twice, there may form a resistance line. It may act as a double top pattern. This is important information for the traders.
In the diagram shown above, we can see how a resistance line has been formed. See. how the bulls were rejected again during a further upmove. It was a pull-back rally that tried to break the resistance but failed eventually. The resistance formed there proved to be strong enough to sustain the bull pressure.
The trader should also know that if the bulls were able to break through the resistance line, the upmove will continue and the tweezer top pattern will not be a valid one.
The bearish reversal may sustain for the short term. This must be kept in mind by the trader.
How to Trade the Tweezer Top Candlestick Pattern?
The tweezer patterns are comparatively more precise patterns. Though in terms of financial investing, an investor or trader should never depend on one indicator alone. Confirmation from other indicators is a must.
Therefore before entering a trade, it is necessary to confirm the reversal pattern from another oscillator/indicator. After the trader considers the time is ripe for entering a sell/ short trade, the trader makes certain that the entry is done below the second candle, as shown in the diagram above.
The stop-loss is kept above the resistance line formed after rejecting the bulls. Because if any candlestick, later decidedly closes above the resistance line, we consider that the reversal pattern was broken.
The target price can be kept either at the 1:2 risk/ reward ratio. Or the target price should be the last swing low where there may be a support line formed earlier.
As the tweezer top is a precise pattern, we can define the stop-loss, entry and target quite easily.
Tweezer Bottom Candlestick Patterns
Similar to the tweezer top patterns, the tweezer bottom candlestick patterns are also tweezer patterns consisting of two candlesticks. This is a bullish reversal candlestick trend pattern. A bearish and a bullish candlestick together create this signal.
Found at the bottom of a bearish trend, this pattern indicates the start of a new bullish trend. These patterns can be seen often and may also be seen anytime during a bearish trend to indicate a short-term bullish trend.
What is the Tweezer Bottom Candlestick Pattern?
The tweezer bottom pattern is formed at the bottom of a bearish trend or a temporary bottom of the bearish trend. This pattern has two candlesticks, the first one is a bearish candlestick shown in red colour which is a part of the prevailing bearish trend. And the second candle is a green candlestick. The low of the red candle and the low of the green candle rest on the same or nearly the same level.
Features of Tweezer Bottom Candlestick Patterns
Similar to the tweezer top patterns, the tweezer bottom patterns also have some unique features.
Generally, a valid tweezer bottom pattern indicates a short-term bullish reversal. Therefore, the bearish trend ends with the start of this pattern. Thus, we find these patterns at the end of a bearish trend, even if the trend is short-lived.
Structurally, the first candle is a bearish candle. The first candle is a continuation of the prevailing bearish trend.
The second candle is a green candle from which the bullish reversal starts.
The low of the first candle is the same as the low of the second candle as if both the candles are standing on the same or approximately the same base.
The structure of the first and the second candle varies, but both must have the same or almost the same lows. Unless this condition is maintained, the tweezer bottom can not be formed.
The third candle, that is the candle after the tweezer bottom pattern assures validity. The bullish reversal pattern starts from that.
Characteristically speaking, both the tweezer top and bottom patterns show similar but opposite features. Therefore, any variation seen in any tweezer pattern may also be seen in the other pattern somewhere else.
What do the Tweezer Bottom Candlestick Patterns tell us?
The tweezer bottom starts a bullish reversal. Hence the traders who were riding the bearish wave may exit after seeing the tweezer bottom pattern.
The tweezer bottom pattern also creates the support line, which may be temporary. Hence, the tweezer bottom indicates the immediate bottom of the bearish wave.
In case, the upmove does not continue and the retracement breaks through the support line, the uptrend will not be valid.
How to trade the Tweezer Bottom Candlestick Pattern?
Trading a tweezer bottom pattern follows the same rules we follow during the tweezer top candlestick pattern.
Firstly, the trader can only trade, when the trading condition is confirmed by other indicators.
The tweezer pattern accurately suggests the trade entry and stop loss.
Buy above the high of the second candle of this candlestick pattern.
The stop-loss should be placed below the low of this swing which is where the support line has been formed.
The trade may be continued till the next downtrend or till the profit target is reached.
Advantages of Trading Tweezer Candlestick Patterns
As already discussed, the tweezer candlestick patterns are comparatively more precise patterns. The trend traders extract maximum advantage from these patterns. Trend traders can be alerted about the top of the previous uptrend or bottom of the previous downtrend and accordingly exit from the existing positions when these patterns are seen.
From these patterns, the trend trader gets to know the resistance and support lines. We can see how the support and resistance levels have been formed from these tweezer patterns. Precise stop loss, entry and exit can be had from trading these patterns.
Historically, the tweezer top pattern and the tweezer bottom pattern showed good accuracy. The backtesting over long periods shows excellent win percentages.
Tweezer patterns perform well in trending markets. The tweezer top pattern gives good signals about the start of a bearish trend. And the tweezer bottom candlestick pattern efficiently indicates when the bull trends start.
FAQ
What is a Tweezer bottom candlestick?
The tweezer bottom pattern is formed at the bottom of a bearish trend or a temporary bottom of the bearish trend. This pattern has two candlesticks, the first one is a bearish candlestick shown in red color which is a part of the prevailing bearish trend.
What does a Tweezer bottom indicate?
The tweezer bottom indicates a bullish reversal from the support line.
What is the Tweezer candlestick pattern?
Two candlesticks of opposite trends and the same base form a tweezer candlestick pattern, They are of two types, tweezer top pattern and tweezer bottom pattern.
What do Tweezer tops indicate?
Tweezer tops indicate a bearish reversal.
Are Tweezer tops bullish?
No, tweezer tops are not bullish. Instead they indicate the end of current bullish trend.
