The Tweezer Candlestick formation helps identify short-term bearish and bullish reversals in the market. By using the Tweezer Candlestick pattern, you can analyze the ideal buying and selling price points in the market. In our article, we will learn about the Tweezer Candlesticks pattern in depth.
Understanding the Tweezer Candlestick formation?
The Tweezer Candlestick formation is a reversal pattern that indicates either a market top (strong uptrend) or market bottom (strong downtrend). It provides traders with a bearish to bullish reversal point in a downtrend and bullish to bearish reversal point in an uptrend. The formation consists of two or more candlesticks, with alternative colors, that touch the same price top or bottom one after the other. The first candlestick that appears has a larger body than the second candlestick.
- The tweezer top pattern consists of a candlestick body, which is the difference between the open and close price
- The lower wick in the candlestick refers to the market low
- The upper wick in the candlestick refers to the market high
- A red candlestick (bearish candlestick) signifies that the close price was lower than the open price
- A green candlestick (bullish candlestick) signifies that the close price was more than the open price
Types of Tweezer Candlestick formation
1. Tweezer Top Candlestick
Tweezer Top Tweezer Candlestick patterns are a bearish reversal pattern that occur when two or more candlesticks touch the same high price level in the market consecutively. The pattern starts with a green (bullish) candlestick in an uptrend and opens on the second day, touching the previous day’s high, slowly followed by a red (bearish) candlestick, reversing into a downtrend. At this point, traders receive an exit or sell signal in the market due to the expected market fall. Once the market reverses, traders can place short orders to trade in the falling market.
2. Tweezer Bottom Candlestick
The Tweezer Bottom Candlestick is a bullish reversal pattern that occurs when two or more candlesticks touch the same low price level in the market consecutively. The pattern starts with a red (bearish) candlestick in a downtrend and opens on the second day, touching the previous day’s low, slowly followed by a green (bullish) candlestick, reversing into an uptrend. At this point, traders receive an entry or buy signal in the market due to the expected market rise. At this point, traders can place long orders to trade in the rising markets.
Tweezer Candlestick strategies
1. Hammer Candlestick strategy
The Hammer Tweezer Candlestick strategy is used during an end of an uptrend and provides ideal exit signals. It consists of candlesticks with a short body, either a very short or no upper wick, and a very long lower wick which is twice the size of the candlestick’s body. The candlesticks always have a long lower wick, indicating a downtrend reversal. When there are two or more candlesticks with the long lower wick, the pattern confirms a strong downtrend market reversal signal, indicating traders to either exit the market or short their trades.
2. Dark-Cloud Cover Strategy
The Dark Cloud Cover Tweezer Candlestick strategy is also applied as an uptrend ends. It is a bearish reversal pattern that consists of two candlesticks and identifies sell signals. The first candlestick in this pattern is a green (bullish) candlestick with a large body, followed by a red (bearish) candlestick with a comparatively shorter body. The second candlestick opens at a price level higher than the previous day and closes at a level below that of the previous day, signalling a market trend change. Since it is a downtrend reversal signal, traders can place sell or short orders in the market to trade along with the falling markets.
3. Engulfing strategy
The Engulfing Tweezer Candlestick strategy is a reversal pattern that appears at either an end of a downtrend or uptrend. It helps traders identify both entry and exit signals in the market. The first candlestick in the Engulfing pattern has a small body and the second one has a comparatively larger body. If the first candlestick is green (bullish) and the second is red in colour, it means that the market is expected to reverse and fall (downtrend domination). If the first candlestick is red (bearish) and the second is green in colour, it means that the market is expected to reverse and rise (uptrend domination).
- If the Engulfing Tweezer pattern occurs during the end of an uptrend, it is a bearish reversal signal and provides traders with exit and sell opportunities
- If the Engulfing Tweezer pattern occurs during the end of a downtrend, it is a bullish reversal signal and provides traders with entry and buy opportunities
4. Belt Hold lines strategy
The Belt Hold Lines Tweezer Candlestick strategy determines the market sentiment through a single candlestick. It helps traders identify market uptrends and provides them with ideal market entry points accordingly. This strategy can be applied in both bearish and bullish markets. The Belt Hold Line strategy consists of either a red (bearish) or green (bullish) candlestick that opens near the previous day’s high and closes near the previous day’s low price, respectively. The longer the candlestick, the higher the chance of the market reversing.
- When the Belt Hold pattern appears during an uptrend, it is a top reversal pattern that signals traders to place short or sell orders and exit the market due to the potential future market price fall
- When the Belt Hold pattern appears during a downtrend, it is a bottom reversal pattern that signals traders to place long or buy orders and enter the market due to the potential future market price rise
Trade with the Tweezer Candlesticks to identify market reversals
The Tweezer Candlestick patterns help traders identify significant market reversals and place buy and sell orders accordingly. Start trading with Blueberry. to leverage the power of these trading strategies with a seamless trading experience. Sign up for a live trading account or try a demo account.
Disclaimer:
- All material published on our website is intended for informational purposes only and should not be considered personal advice or recommendation. Traders should carefully consider their objectives, financial situation, needs, and level of experience before entering into any margined transactions.