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WHAT IS TWEEZER CANDLESTICK PATTERN, AND HOW TO TRADE IT ?

yourFXguide-Tweezer candlestick pattern was introduced by Steve Nison, who worked to popularize Japanese candlesticks in west, in his book "Japanese Candlestick Charting Techniques."Japanese candlestick charting is the best among the all charting techniques to present changes in price. In this post I am going to  introduce tweezer candlesticks pattern that can be considered as a reliable signal of trend reversal or continuation. 

First of all we need to learn "How do tweezer candle stick patterns look like ?" In general, a tweezer candlestick pattern is composed of two consecutive candlesticks, and when they are at the top of a trend, they have the highs at almost exactly the same level, and when they are at the bottom they have lows at exactly the same level.

A tweezer top is composed of two consecutive candlesticks, that have the highs at almost same level. Similarly, a tweezer bottom composed of two consecutive candlesticks, that have the lows at almost same level. Remarkable,a tweezer top follows a bullish trend and a tweezer bottom follows a bearish trend. 

In above price chart we found a tweezer top on 30m chart of eur/usd currency pair. Tweezer top is considered as a signal of reversal at top. When identifying a tweezer top we should remember the following key points-
  • The highs of the two consecutive candles should be at almost same level.
  • The color of the candles are not important.
  • The first candle should be formed with relatively large body, that is formed by opening and closing price.
  • The size of the second candle is not considerable. 
  • A tweezer top should follow a bullish trend.

The price chart presented above is a 30m price chart of eur/usd currency pair, where we can see a tweezer bottom is formed. Tweezer bottom indicates a trend reversal at the bottom of a trend.While identifying a tweezer bottom on price chart we should remember the following key points-
  • The lows of the two consecutive candles should be at almost same level.
  • The color of the candles are not important.
  • The first candle should be formed with relatively large body, that is formed by opening and closing price.
  • The size of the second candle is not considerable. 
  • A tweezer bottom should follow a bearish trend. 
Successful identification of tweezer candlesticks pattern is very important before you place an order. If the highs or lows of two consecutive candles  are exactly at same level, the tweezer candlestick pattern is more reliable. If a tweezer candlestick pattern also represents any other candlestick patterns, formed with two candlesticks, the tweezer pattern is considered as more accurate. 

Generally, when a tweezer top is identified at the top of a bullish trend, a short entry is suggested when the price closes below the closing price of second candle. Similarly, when a tweezer bottom is identified at the bottom of a bearish trend, a long entry is suggested when the price closes above the closing price of second candle.

Tweezer candlesticks patterns can be more accurately traded, if they are traded at support or resistance levels. The support and resistance levels can be identified with any of the popular tools such as pivot point analysis, fibonacci retracement levels, trend lines etc. 

Dear Traders,If you have any question regarding this post, you can drop it into the comment section below. I generally respond to your comments within 24 hours.

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