Find out the two types of Tweezer Candlestick Pattern to help you with Forex trading

One of the most reliable reversal strategy patterns is called Tweezer Candlestick Pattern. Our latest video shows you the difference between Tweezer Bottom and Tweezer Top Candlestick patterns.

Use Tweezer Candlestick pattern in your daily trading

Hello, traders! We continue to cover basic Candlestick patterns and strategies that you can use in your daily trading. So, today we are going to cover the strategy called, “Tweezer”, which is a strategy that is very common in trading, and it represents one of the most reliable reversal strategies patterns. So, there are two types of Tweezers, as with many other Candlestick patterns, those are the Tweezer Top and the Tweezer Bottom. So, in this particular chart, Pound/Dollar four-hour chart, we have an uptrend, this is the first step, or condition, that you must fulfill if you believe that this is a Tweezer pattern in place. So this is an uptrend, obviously, you can that we pushed higher, we pushed more than 350 pips to the upside, and then, at the top is actually what is of our interest. So, we have two Candlesticks and Tweezer is a two-candlestick pattern.

In this particular case, we are talking about the bearish Tweezer Top, that occurred at the end of an uptrend, where you can see in the first candle, that the bulls take price higher, close near the highs, not at the high, but closer to the high, and, however, on the second day the price opens, it does not create a new high, this is an extremely important condition, so we don’t rally higher than the previous candle, but, more or less, we push lower and the trend or the sentiment reversed completely. So, the market, more or less, as I said opens and it goes down, eliminating the entire gains of the day one, or the previous day. So, as I said three important conditions. First, it’s an uptrend. The second condition would be that we are talking about two candles, the first one bullish, the second one is bearish, and the second one does not create a new high when we are talking about bearish Tweezer Tops. And, of course, everything that has been gained in the previous day must be erased with the second candle. This means that the bears are stronger than the bulls, since we close at the lows and we erased all the gains from yesterday and, as you can see in this chart, the Pound/Dollar, we pushed lower, especially once you see the confirmation in this huge, long, red candle, this means that we are going to continue down. Unlike some other patterns that, more or less, offer us a sign of what is going to happen in the future, Tweezer can be traded almost immediately, as soon as you have the close of the second candle, you can actually put in trade, put our Stop-Loss above the highs and then look below for the first resistance, where you’re going to take your profits off the table. So, as I said, Pound/Dollar chart, look again, after we correct here we have again one minor uptrend. We go from 1.3850 to 1.4070, so more than 200 pips and at the top we have a long bullish candle, but the second candle is longer and it does not create a new high, so one bullish from bearish, again, but the bearish prevails which means that, again, this is a reversal pattern and we push immediately lower.

On the other side, bullish Tweezer Bottom it occurs during a downtrend when bears continue to take the price lower, as you can see here, so we have a downtrend, clear. Look, we have a big push here, from 1.2350 to 1.2250, so in one trading session we pushed more than 100 pips, but at the bottom of what we have is a reversal, since the second candle, the bullish candle opens at the bottom, it does not create a new high, it erases all gains from the previous candle and then it starts pushing higher creating higher highs. So, again, we are talking about the reversal in the price action and as it is the case with the bearish Tweezer pattern, in this case, if you’re looking to enter into the trade, you think this is a reversal, a Tweezer is a quarter-level pattern quarter reliable reversal pattern, and you enter into the trade, you put your Stop-Loss below the previous low, and then you’ll look, depending on your risk management, what are you trying to get? It depends, for example, let’s see, this example. So, if you wanted to trade, you can see that the price stopped here, at this low. So, if you would have entered here, after the candle has closed at 2255, until 2295 you could have 40 pips Take-Profit, while your Stop-Loss would be 20 Pips, or 2:1 risk:reward, in this particular trade present. So, again, a Tweezer is a reversal pattern. It’s a common one. You can find it in your everyday charts. It’s extremely also reliable on daily and weekly charts and it shows that the market is reversing, it’s a reversal pattern, market is reversing, and then you can start thinking about entering trades to ride the upcoming trend.