Tweezer Patterns are a dual Candlestick Patterns that indicates reversal in the current direction ad trend of the price movement of a currency. It is formed when there is an extended period of uptrend in the price movement or an extended downtrend. In both cases it reflects a reversal. This pattern resembles a pair of tweezers therefore it is named as Tweezer Patterns.
Kinds of Tweezer Pattern:
These are of two kinds:
- Tweezer Top
- Tweezer Bottom
Bearish Tweezer Top:
Tweezer Top is a reversal indicating pattern that is bearish in nature. It is formed at the top level (highest point) of an uptrend of a currency in Forex Trading. When the sellers affect the market and eventually increase the price of a currency at the end of the day. But on the next day, the market witnesses a fall in the price of the same currency as the buyers succeed in taking control of the market.
Bullish Tweezer Bottom:
It happens when the buyers succeed in keeping the price to a lower level till the end of a day. Then the very next day, you can witness a significant increase in the price of a currency as the sellers dominated the market.Thus all the losses of the previous day are recovered the next day.
There are two candlesticks in Tweezer pattern. The first candle reflects the current trend of a currency in Forex trade while the second candle reflects the reversal in the trend. The latter candle is always opposite to the previous candle.
For example, if the price is increasing high then the 1st candle is bullish while the 2nd candle will be opposite to bullish (i.e bearish).
In order to rely on the analysis of Tweezer patterns, you need to closely watch its structure. A flaw in its structure will result in erroneous analysis of the trade. Therefore you need to check thoroughly that the shadows are of same length. Similarly the high points of the Tweezer Tops should be same while the lowest points must also be same of the Tweezer Bottoms.