What is the Tweezer Top & Bottom Candlestick Pattern?
- 4 min read0•
- 09 Nov 2023
Key Highlights
- The tweezer top is a bearish reversal pattern characterized by two candlesticks with nearly the same high in an uptrend. Identification criteria include being in an uptrend, a green candle on the first day, and a red candle on the second day with a similar high.
- Tweezer bottom is a bullish reversal pattern with two candlesticks having similar lows in a downtrend. Identification criteria include being in a downtrend, a red candle on the first day, and a green candle on the second day with a similar low.
- Traders should exercise caution and consider squaring off their positions when they spot tweezer candlestick patterns. Other technical indicators should be used to confirm reversal patterns.
What is the Tweezers Top Pattern?
The tweezer top pattern can be described as a bearish reversal pattern characterized by two candlesticks. An uptrend begins with a green candlestick, which appears on the first day. On the second day, the high was almost as high as the first.
Identification Criteria There are three factors that help identify tweezer tops:
- Stocks are in an uptrend at the moment.
- Observation of a solid green body on the first day.
- The formation of the red body on the second day, which has a similar high to the previous day.
Interpretation of Tweezer Top Patterns
In the second candle's high, we see a resistance area. It appears that the bulls are pushing the price upward, but they are not willing to purchase above the highest rates. Therefore, the bears are forced into action, driving the price down with great force as a result. Additionally, the top-most candles with the same height indicate a possible reversal or pause in the uptrend. Generally, trend reversals are confirmed by bearish reversal candles on the third day.
What is the Tweezer Bottom Pattern?
A tweezer bottom pattern is a bullish reversal pattern. The first day in this candlestick pattern is marked by a red candlestick, and a downtrend is in progress at the time. In addition, the second day's low appears similar to the previous day's.
Identification Criteria Tweezer bottoms can be identified by three factors:
- A downtrend in the stock market.
- The observation of a solid red body on the first day.
- The formation of the green body on the second day, which has a similar low to that of the first day.
Interpretation of Tweezer Bottom Pattern
Second candle's low indicates a support area. Additionally, even though the bears keep pushing the price down, they are not willing to sell below the lower price. Due to this, the bulls step in and push the price upward with great force. Based on the identical lows of both candles, the downtrend may reverse or pause. A bullish reversal candle formation on the third day confirms the trend's reversal.
Importance of Tweezer Candlestick Pattern
When a trader observes this candlestick pattern on a chart, the trader should be cautious that a reversal is likely to occur. When a reversal pattern forms, it is better to square off the position. With the help of other indicators, they should confirm the formation of the tweezer candlestick pattern.
Conclusion
The tweezer candlesticks are trend reversal patterns with two candlesticks. Tweezer top candlesticks indicate bearish reversals, whereas Tweezer bottom candlesticks indicate bullish reversals. Traders should be cautious when they see tweezer candlestick patterns on the charts, as that indicates a reversal is about to happen. The tweezer candlestick pattern should also be confirmed by other technical analysis indicators.
FAQs on Tweezer Top & Bottom Candlestick Pattern
How do Tweezer Bottoms look on a candlestick chart?
On a candlestick chart, a Tweezer Bottom pattern consists of two or more consecutive candlesticks with equally low prices forming a horizontal line at the bottom. Although the candlesticks may have different highs, their lows align to create a support level.
How do you trade tweezer candlesticks?
Trading the bullish tweezer is similar to trading other bullish reversal candlestick patterns. In order to enter a trade, you need to wait until the formation is completed. A stop-loss is always placed below the latest low, as a new low would invalidate the pattern.
What is the tweezer top in Nifty?
Tweezer top candlestick patterns feature two candlesticks and are bearish reversal patterns. When a stock starts moving up, there's a green candlestick on the first day. On the second day, it opens high, making an almost identical high as the first one.
What are the conditions for a tweezer candlestick pattern?
A tweezer top occurs when two candles occur back-to-back with very similar highs. A tweezer's bottom occurs when two candles, back to back, have very similar lows. There is more significance to the pattern when there is a strong shift in momentum between the first and second candles.
How do you trade a tweezer top pattern?
The tweezer top is easy to trade. Put a sell order beneath the second candle, a stop loss above the pattern's high, and a profit target under the entry point.
