Tweezers Provide Precision for Trend Traders

So while perfect tweezer tops would have equal highs, it is ok if one high is a tad higher than the other. If you had taken that long trade and waited for every confirmation, in the worst-case scenario, you would have profited from around 2.3$ to 2.6$. However, the possibility was there to make a greater profit, especially if you had protected yourself with a stop https://forexhero.info/what-is-simplefx/ loss at the 2.8 level, just below the last top indicated by the ZigZag. At the end of the day, whether or not you utilize tweezers in your trading is entirely up to you. That’s why we placed our entry at the close of the very next candlestick after the hanging man. If the next candle closes under the hanging man body, odds are strong that a top has been reached.

Let’s delve a bit deeper into our overview chart to gain Tweezer trading insights for future use. In case a bearish breakout happens, you can execute the sell-stop trade. However, on the second day in the above example, how traders feel (i.e. their sentiment) reverses completely. Unlock our free video lessons and you will learn the exact chart patterns you need to know to find opportunities in the markets.

How to trade tweezer top candlestick?

Here is a comparison with many other popular chart patterns used to trade cryptocurrencies. Trade-worthy setups can be further confirmed with trading tools like the Relative Strength Index, Stochastic, MACD, Bollinger Bands, and other technical indicators. The Evening Star consists of three candlesticks, with the middle candlestick being a small Star that gaps away from the first candlestick.

• As candlestick patterns, they give you a real-time reading of the market.
• In our overview example above, the initial Bottom pattern has rather short down wicks.
• In Figure 4, the trend is up, so when bottoming tweezers occur in a pullback, it marks a potential entry (green circle).
• For intraday tweezers, look out for patterns where the second candle is a reversal candlestick.

As some candles take on a different meaning altogether in different locations, even though the structure of the candle stays the same. If you want a few bones from my Encyclopedia of candlestick charts book, here are three to chew on. Our watch lists and alert signals are great for your trading education and learning experience. They can be continuation candles if they form in a pullback of a strong trend.

How to Trade the Tweezer Top Pattern in Forex

The bulls were not willing to buy above that highest price, so the bears returned and overpowered the bulls, pushing the price back down. From beginners to experts, all traders need to know a wide range of technical terms. Trade up today – join thousands of traders who choose a mobile-first broker.

The appearance of a tweezer candlestick pattern tells the market that price could continue to struggle and foretells a possible change in price direction is coming. If the pattern has formed at an important support level or resistance level, it can present an ideal trading entry for crypto traders. The Tweezer Bottom pattern is the opposite of the Tweezer Top and could appear near the end of a downtrend. Here the first candlestick must be a dark, bearish candlestick with a large real body, followed by a bullish, light-colored candlestick with a short real body. The two candlesticks must have either the exact same low or their lows should be very close together. The lows of the two candlesticks are an important defining characteristic in the Tweezer Bottom formation.

What does Tweezer Top Candlestick Chart Pattern tell us?

In fact, an upward breakout (which occurs when price closes above the top of the candle pair) happens 56% of the time. Both values I consider near random, so you will likely not be able to accurately guess the breakout direction with any certainty. Two candlesticks form highs that are almost; if not the exact same. In conclusion, these patterns have proven to be valuable tools for making profitable trades.

The article does not warrant the completeness or accuracy of the information and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article. Suppose company ABC opened at Rs.250, and as the day progresses, it rises upwards. The second day also opened on a positive note, and the stock reached a high point of Rs.325 during the first half of the trading session. Between 74%-89% of retail investor accounts lose money when trading CFDs.

Bearish Tweezer Top Pattern Example

Crypto traders can scan the price charts of popular cryptocurrencies and look for tweezer patterns. Once identified, follow the four simple steps above to trade the tweezer chart pattern effectively. Tweezer patterns appear in financial markets, including the forex market, quite often.