The Tweezers candlestick patterns often offer the perfect opportunity to enter and exit trades with trend reversals. Tweezer tops candles mark the top of an uptrend and an impending reversal down, while tweezer bottoms will do the opposite and mark the bottom of a trend.
Even though this is a powerful trend reversal indicator, I see a lot of conflicting information online about how to identify it in particular. I have some special rules that I like to follow when I’m identifying this pattern. From my experience, this specific setup that I follow may not catch all tweezers, but it helps you find the most powerful ones that are best to trade. I’ll be teaching you my rules and also showing you some examples for this candlestick in this analysis guide.
This pattern analysis is part of a much larger training series that will teach you everything you need to know to successfully trade candlestick charts. Make sure you take a look at the complete guide here: Japanese Candlestick Chart Analysis.
Candlestick Pattern Basics
The tweezer tops and bottoms candlestick patterns have two main requirements to identify them:
- Two long candles are needed, and they should have opposite trends, so one should be bullish and one bearish.
- The closing price of the first candle and the opening price of the second candle should be the same or very similar.
There’s actually a third requirement for these patterns, but this is where you’ll find a lot of different information depending on who’s teaching this trading strategy. Personally, I like the see the second candle longer than the first candle. For a bullish bottoms pattern, this makes the closing price of the second candle higher than the opening price of the first candle. All of the losses from the first candle are reversed during the second candle and some gains may even be made. The opposite occurs with a bearish tweezer tops.
I’ve actually seen some websites recommend to have a much larger first candle, which is pretty much the opposite of what I want to see. I feel like a larger second candle solidifies the trend reversal better, while a shorter second candle is more of an indication of indecision with buyers and sellers. I would rather see that traders have decided and are starting to swing the price action in a specific direction.
First I want to cover tweezer tops. This is the bearish tweezer. The easy way to remember it is the “tops” will mark the top of the trend and then reverse lower. With this pattern, you want to see the tops of the two candles at roughly the same height. The first will be bullish and the second will be bearish.
Take a look at an example of a Tweezer Tops pattern below…
The price action is bullish to start, pulling prices up to a peak. Next the trading switches trends to bearish, reversing the previous gains and potentially driving the market down even more. I recommend trading tweezer tops after uptrends in prices. You can exit long positions and/or open short orders when this signal appears. However, see my additional trading tips later in this article for more information about combining tweezers with other indicators to confirm trend reversals.
With tweezer bottoms, you have the opposite situation. This is a bullish pattern that is marking the “bottom” of a downtrend, which should then reverse into a price rally. The first candle is bearish, which brings the prices down to a level where the bulls begin to fight back. The second candle is bullish, so the momentum has been reversed.
I have an example below for Tweezer Bottoms…
Note the closing price of the first candle and the opening price of the second are roughly the same – these are the prices at the “bottom” of each candlestick body. This pattern is best traded after a downtrend in the price action, so you can place buy orders or exit short positions when the tweezer bottoms pattern appears.
Trader Emotional Analysis
Tweezers will mark trend reversals, but they do so with power instead of a whimper. Large candlestick bodies tell you that there was a big move in the price action. First this happens in one direction and then seesaws right back in the other direction. In general, this tells you that the previous market activity has ceased and then flipped in the opposite direction.
For a bullish tweezer bottoms, sellers are in control first. They’re able to drive prices down fairly far from the opening to the closing price, which generates the large candle body. As a trader, it should simply tell you that bears have a lot of strength and activity in the initial candle. The next candle is green / white, so bulls have now taken control from the bears. Strong buying action is present, which allows the value to increase rapidly. If other conditions in the market are right, this upward trend should continue.
With bearish tweezer tops, the first candle is bullish. The large body tells you that buyers have a have high level of trading activity, rallying the price. During the second candle, this power switches to the sellers. Buyers likely are taking profits here at the peak, so bears get a strong foothold on the price action and push it down. Again, when other conditions are right, the downward trend will likely continue.
Trade Tweezer Trend Reversals
I’ve put together a real-life cryptocurrency chart for you below that demonstrates both a tweezer tops and bottoms, showing their trend reversal power…
The bottoms shows up first, causing a decent price increase. The tops then triggers a sell-off. In this specific scenario, the tops actually broke below support after a bit of a sideways market and triggered a breakout down. This ended up switching the support line to a resistance line in future price action.
Support & Resistance Trades
When you want to initiate a trade based on tweezer bottoms and tops patterns, you’ll do best when you combine those signals with other indicators. Levels of support and resistance will most often control the price action, but beware of breakouts in the direction of the overall market trend. The example chart I provided above is a perfect example of this scenario. This was a recent chart from the Spring – Summer crypto winter of 2022, so the overall market conditions were dragging prices down over time. You can really see the extra strength present for sellers compared to buyers when you look at the body sizes of the two tweezer trades in the chart. The bearish trend is much faster and more violent than the rally.
Open up your chart for the stock, crypto or other security you want to trade. Try to plot some potential support and resistance lines based on a number of factors like moving averages, trend lines, supply and demand, and more. Price action will often be constrained within those levels, so you want to wait for the value to hit one of these levels with a tweezer pattern displaying before you make a decision to enter or exit a position.
In general, different assets will often trade based on different factors controlling levels of support and resistance. Sometimes you simply need to monitor the market for a while to get a sense of what indicators are more accurate and reliable to predict price swings. That knowledge combined with candlestick analysis can offer some really profitable trading opportunities.