How to Interpret the Tweezer Candlestick Pattern

There seems to be a lot of confusion surrounding the Tweezer Candlestick Pattern so I thought it would be appropriate to write a post all about tweezer patterns.

Tweezer Candlestick Pattern

The tweezer candlestick pattern can be one of the most powerful predictive patterns that we see showing up on the chart. In my personal experience, I have learned to trust the signal and believe it when I see it because it is usually right.

The challenge a lot of people have is interpreting this pattern because there are so many possible variations to it.

Here's the technical definition for a tweezer top and bottom: Tweezer Pattern.

Two candle lines with matching highs or lows. In and of itself this definition is not overly descriptive, which is why a lot of people struggle to define it.

We could get a little more specific by defining both the tweezer top and tweezer bottom.

Tweezer top:

Two candle lines with matching highs, after a swing high, where the first candle is white and the second candle is black.

Tweezer bottom: 

Two candle lines with matching lows, after a swing low, where the first candle is black and the second candle is white.

These definitions help define a little better but still leave several unanswered questions. So let's look at the context of what constitutes a tweezer top and which variations are actually reliable.

Location

The most important thing to consider when identifying any candlestick pattern is the location. Where is this pattern occurring?

Bearish reversal patterns need to occur after an upswing whereas bullish patterns need to occur after a downswing.


Far too often people try to force a pattern and they identify the right candle structure, but do so in the wrong location.

This is a big mistake 

The real power of the candle sentiment is dependent upon location.

Some candles even take on a different meaning altogether in different locations, even though the structure may be the same.

In this picture above, you see a small spinning top candle at resistance with a long lower shadow - this is a hangman (a weak bearish reversal pattern).

But the same candle structure, a small spinning top with a long lower shadow, if it occurs at support, is a hammer (a very strong bullish reversal pattern).

Alternating colors, besides location, the most important thing in identifying the tweezer pattern is the order of the color of the candles.

A Tweezer top must occur at the top of an upswing (location) and with the alternating color of white to black.


The color is essential because that is the story of the sentiment that we are interpreting. The trade is running up and actually, has a strong up day (strong white candle) and immediately reverses the next day and takes out all of the progress (strong black candle).

This is a signal of shifting sentiment.In the case of a tweezer bottom, it must occur at the bottom of a downswing (location) and with the alternating color of black to white.


Again the color is essential because that is the story of the sentiment that we are interpreting. The trade is running down and actually has a strong down day (strong black candle) and immediately reverses the next day and takes out all of the bearish progression in favor of upward momentum (strong white candle).

This is a signal of shifting sentiment. But these are not the only things to consider in the correct identification of the candlestick.

Candle Shadows

Another question a lot of people have is about the candle shadows - do they count?

Are they important?

Do they signal anything?

The simple answer is no.

The candle shadows are not really considered in determining whether or not the pattern is a tweezer. If one candle had an extra long shadow it might slightly adjust how I would interpret the pattern but typically when we see a long shadow with a tweezer top it is an upper shadow, and this simply reinforces the bearish nature of a tweezer top.

Similarly, when we typically see a long shadow with a tweezer bottom it is a lower shadow which reinforces the bullish nature of the tweezer bottom.


What about Candlestick bodies?

This is perhaps the most confusing part of identifying tweezer candlestick patterns. One of the things that leaves this pattern open to so much subjectivity is the reality that the candle bodies don't have to be a specific size or relationship to each other.

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All of these patterns are tweezer patterns:


You can see how some of these patterns might not indicate that big of a reversal signal. The mere fact that the highs or lows of the candle are matching does not specifically mean we have a reversal at hand. The nebulous nature of this broad definition makes predicting tweezer candlestick follow through somewhat difficult.

According to the broad definition of tweezers, these patterns do not appear that special and may or may not actually lead to a reversal. Thomas Bukowski suggests it may only be around a 50/50 chance of a reversal.  But he uses a very broad definition in identifying this pattern so consequently, he gets very broad results.

If you identify the right tweezer pattern, the reliability is an incredible high. What is the best tweezer pattern? Despite the statistics, I have found that certain variations of tweezer patterns are shockingly reliable.

I don't have hard statistics on the follow through, but when you identify a tweezer top or bottom where the candles are:

  • Fairly large candle bodies
  • Bodies are about the same size

I have found these variants of the tweezer trade usually swings the other direction - this is the secret to identifying tweezer patterns and making them very profitable for you.

Identifying the perfect tweezer candlestick pattern now you should understand better how to identify the ideal tweezer candlestick pattern.

Let's recap:
  • Tweezer top candle body highs need to match.
  • Tweezer tops need to alternate white to black candle bodies.
  • Tweezer bottom candle body lows need to match
  • Tweezer bottoms need to alternate black to white candle bodies
  • Upper or lower shadows are not so important
  • Candle bodies technically do not need to be the same size
  • Larger, similar sized bodies tend to have the best follow through

Now you should have a much better idea of how to identify and interpret the tweezer candlestick patterns. These patterns occur pretty frequently and are a very good signal that this trade is about to swing in the other direction.  

To learn what to look for and you too can profit handsomely with tweezer patterns!

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