Since candlesticks are the basic building block of most technical analysis, the ability to recognize different candlestick patterns is a crucial trading skill.
First though, let’s start with a definition.
What Is a Tweezers Pattern?
A tweezer pattern is a 2-candlestick formation that may signal a reversal. It is made up of a large candlestick moving in the direction of trend followed by another one moving against trend. The wicks must be nearly even on the trend side of both candles and the first close must match the second open.
The tweezer candlestick pattern has both bullish and bearish variations, called the tweezer bottom and tweezer top, respectively. For these patterns, the trend-side wicks form a band with the close of the first and open of the second candlesticks. This price band essentially acts as a lid or stopper on future price action.
Of course, no candlestick pattern guarantees a particular outcome. Instead, they offer clues as to what is going on in the market.
So the question is, what does a tweezer pattern really tell you?
What Tweezers Patterns Mean
Like many candlestick patterns, the name itself doesn’t reveal much.
And unlike some, English speakers do not use the Japanese name for it. The term “tweezer” comes from the fact that it looks like a pair of tweezers.
In trading terms:
- During the first period, the price drove strongly in the direction of trend but pulled back slightly before closing.
- During the second period, price begins moving in the direction of trend until it reaches the high or low of the previous period before switching directions to drive (and close) against trend.
This sets the stage for reversal, as it appears countertrend pressure is ready to take full control.
How To Recognize Tweezers Candlestick Patterns
Traders are attracted to patterns partly because they are easy to spot.
However, it’s also easy to see things on the charts that aren’t truly there (or anticipate events that never come to fruition). That’s one of the reasons why waiting for confirmation is so important.
Technically, a tweezers pattern must:
- Begin with a long candle moving with trend that has a wick in the direction of trend, such as a belt hold candlestick
- End with a long candle moving against trend that has a wick that matches the wick of the first candle
In practicality though, many traders will make various exceptions.
- The second candle doesn’t necessarily have to be a long candle as long as the wicks of both candles are even.
- The wicks don’t have to match exactly as long as both candles are long candles in which the open of the second matches the close of the first.
- The candles don’t necessarily have to have wicks as long as the candle bodies are nearly identical in size.
Depending on who you ask, any of these standards may be more or less important. Moreover, some of these variations may be more properly classified as other reversal candlestick patterns.
Remember, identifying the reversal itself is more important than labeling the formation. That’s not to say these standards are completely unimportant (as we’ll touch on shortly). It’s just to say that the implications are more important than the criteria.
In other words, you need to put it into context.
Where Tweezers Fit in the Chart Narrative
The markets are often characterized as a battle between the bulls and the bears.
Tweezers patterns show that one side attempted to press their advantage on candle one but lost their momentum sometime in the middle of candle two.
On the chart, it looks like an about-face.
It might happen like this on a daily time frame:
After a strongly trending day, many traders expected more of the same the next day. At first, it looked like those expectations would be fulfilled. However, those on the side of trend were unable to push price beyond the previous day’s high or low. After several attempts, the move failed for good. From that point, countertrend pressure took over, resulting in a strong move against trend that settled near the prior day’s open by the final bell.
In the short-term, it amounts to a price action 180.
The question traders need to ask themselves is, “Has the correction run its course or does this signal a trend change?”
To answer that question, you’ll need more than just an understanding of Japanese candlesticks and candlestick patterns. You’ll want to analyze both within the context of greater chart patterns as well as trend and price levels. You’ll also want to make use of your own chart markup and indicators.
Analyze the history of your preferred asset(s) with respect to tweezers patterns and apply it to your own trading style.
Now, you can test (and/or stretch) the criteria we mentioned above to find the most tradeable opportunities. For example, you may find that tweezers where both the wicks and bodies are even perform more reliably than those with more dissimilar candles. Or, you may find something else entirely.
Here is where the story in the charts begins to come into focus.
This is what we call technical analysis.
How To Trade Tweezers Patterns
Reversal points are great places to enter or exit trades.
Tweezers patterns serve as easy-to-spot signs of potential reversals—and may even lead to longer-term tops or bottoms when found on higher time frames.
Generally, you can put more weight into multi-stick patterns than single candles. They give you more information over a longer amount of time. Still, it is considered unwise to trade based on candlestick patterns alone. They rarely have extremely high hit rates by themselves.
You need additional points of confluence to shift the probabilities in your favor.
Some of the more important ones include:
- Volume – Reversals are often accompanied by elevated trading volume. For tweezers, be on the lookout for it on both, but especially the second candle.
- Price Formations – Reversal patterns like the tweezer often form near important support or resistance levels. When they don’t, they are likely to set these price levels themselves.
- Oscillator Shift – Oscillating indicators like the RSI or stochastics are commonly used to identify reversals by analyzing slope, percentile, and/or divergence.
The fewer such factors corroborating the reversal, the less confident you can be about it.
It would be difficult to form a comprehensive trading strategy around tweezers patterns. There simply isn’t enough there to develop a strong edge. Even with a great understanding of trading math, orders, psychology, risk management, options, and automation, you’d still have a hard time.
You’re much better off building your strategy around other tools then using reversal patterns as an additional point of confirmation.
Patterns like the tweezer are much better idea givers than trade makers.
Other Candlestick Pattern Types
The tweezer is but one of many candlestick patterns.
You’d be wise to get familiar with all of the other ones too.
- Abandoned Baby
- Counterattack Line
- Doji Star
- Engulfing
- Harami
- Harami Cross
- In Neck
- Mat Hold
- On Neck
- Star
- Three Inside
- Three Methods
- Three Outside
- Tasuki Gap
- Windows
Sure, there are quite a few of them. But don’t let that intimidate you.
It’s unnecessary to memorize all the names and criteria for every pattern. What’s more important is to learn the principles of price action and technical analysis.
In fact, you’re free to forget all of the names and specifications as long as you can look at a group of candlesticks and understand what they are trying to tell you.
Takeaways
To review:
Tweezers are a type of candlestick pattern that signals a potential reversal. While not a guarantee, their appearance may indicate that market conditions are changing. Thus, they can help you find winning trades.
Of course, there are other candlestick patterns that you should learn about. And even so, the ability to recognize patterns is not enough to trade successfully on its own.
Nonetheless, you’ve now added one more tool to your toolkit.
Have questions or more information to add? Contribute to the conversation in the comments below! Or, if you know someone who could benefit from this post, share it with them. You can also check out our Candlestick Patterns Guide to improve your candlestick analysis skills.