Tweezer Bottom Candlestick Pattern

What is Tweezer Bottom Pattern?

• Tweezers are reversal candlestick patterns that signal a potential change in the direction of price. Both the formations consist of two candles that occur at the end of a trend which is in its dying stages. A tweezer bottom is a pattern that is formed during a developed bearish trend.
• This pattern typically consist of several candles though it is viewed as a pattern comprising of two candles.

Structure of Tweezer Bottom Pattern

• The Tweezer bottom candlestick pattern is a bullish reversal pattern that can be spotted at the bottom of the downtrend.  Between these two patterns, the tweezer top pattern indicates a short term bullish reversal and the tweezer bottom pattern indicates  a bullish trend reversal.
• The tweezer is a tool commonly used for domestic as well as industrial purposes. It has two legs of equal length. The tweezer patterns of candlesticks are similar in structure to the tweezer.  The tweezer top is made up of two candlesticks that have equal rights.
• The tweezer bottom of candlestick have equal bottoms. The tweezer patterns can be represented by two lines, one upright and other inverted, and both of them have either equal tops or equal bottoms.
• The Tweezer bottom candlestick patterns are also tweezer patterns consisting of two candlesticks. This is a bullish reversal candlestick trend pattern.  A bearish and a bullish candlestick together create this signal. Found at the bottom of a bearish trend, this pattern indicates the start of a new bullish trend.
• These patterns can be seen often and may also be observed anytime during a bearish trend to indicate a short term bullish trend.
• The tweezer bottom pattern is formed at the bottom of a bearish trend or a temporary bottom of the bearish trend.  This pattern has two candlesticks, the first one is a bearish candlestick shown in red colour which is a part of the prevailing bearish trend. And the second candle is a green candlestick.
• The low of the red candle and the low of the green candle rest on the same or nearly the same level.

How to Identify Tweezer Top and Bottom Candlestick Patterns

1. Tweezer Top

A tweezer top is formed at the end of an uptrend where the prices makes highs. The first candlestick of this pattern is a bullish candlestick which if formed as per the current market sentiments. As this pattern is formed near the resistance level, the sentiments of the traders reverses and they begin to sell. Due to this bearish sentiment a bearish candlestick is formed that indicates that the bears have taken control over the prices.

        2.Tweezer Bottom

A tweezer bottom is formed at the end of a downtrend where the prices make lower lows. Here the first candlestick of this pattern is a bearish candlestick that is formed as per market expectations. As this pattern is formed near the support levels the sentiments of the traders reverses and the buyers begin to buy. Due to this type of sentiment bullish candlestick is formed that indicates that the bulls have taken control over the prices.

In case of tweezer bottom the confirmation is received from the third bullish candle and the trader can initiate a long position when the higher high of the previous two candles is crossed, keeping second candle low as the stop loss.

How to Identify Tweezer Top and Bottom Candlestick Patterns

1. To Identify Tweezer Top Candlestick Pattern

• The Prior trend should be an uptrend
• A bullish candle should be formed on the first day
• On the next day bearish candle should be formed having similar high as previous day.

2. To Identify Tweezer Bottom Candlestick Pattern

• The Prior trend should a downtrend
• A bearish candle should be formed on the first day
• On next day bullish candle should be formed with similar low of the previous day

What Does Tweezer Bottom Candlestick Pattern Tell Us?

• To understand what tweezer bottoms may be telling us about the market, we have to assume that the market is currently bearish trend. The market sentiments are also bearish with high supply and low demand which pauses the market further down.
• To understand what tweezer bottom tells us about the market it has to be assumed that the market is currently having bearish trend where there is high supply but low demand which is pushing the market further down.
• Now as the first candle of the tweezer bottom candle forms, it seems ordinary. The candle forms a new low and then retraces slightly before closing on high.  The second candle forms now where it does not manage to break the previous candles low but it closes slightly above it and this is where you can notice the change. 
• The bulls now seem to have enough strength enabling them to defend a previous low.

Importance of this Pattern

• When the traders observe that there tweezer top or tweezer bottom candlestick patterns on the charts then the traders should become cautious that reversal is going to take place. It is better to square off the position when the reversal pattern is formed. They should also confirm the formation of tweezer candlestick pattern with the help of other indicators

How to trade the Tweezer Bottom Candlestick Pattern

 The tweezer bottom forex pattern appears often and it tends to forecast a bullish reversal, there are times when a change in trend does not occur. In such situations the traders will often include additional technical confirmation methods such as indicators to identify the candlestick patterns.

1. Firstly trader has to identify the Tweezer Bottom Candlestick Pattern 

2. Secondly look for the pattern

3. Prepare for a Trade Entry

With a Potential Pattern Identified we can prepare a trade entry.  To do this, you can either manually enter the trade or set up pending order.

4. Stop Loss

Place 2 pips below the low of the tweezer lows. The trader can adjust this to analyse the risk and manage it.

5. Take Profit

Place at the nearest market structure or resistance level.

6. Execute the Trade

Because the pending order was placed it will only execute when the market trades at the level we want. So it’s a win-win.

Conclusion

•  Tweezer Bottom Patterns are very useful.  If the trader is looking for a profitable trade then he or she should look for patterns that can be traded successfully.  Tweezer bottom patterns are very reliable and easy to follow. Tweezer bottom patterns work with both uptrend and downtrend moves.
• The bottom line is that there are no right or wrong way to trade these patterns. It is the personal preference of the trader.  If the trader wants to be more cautious about the trade then he can look for these patterns and take advantage of them when they are at the strongest point.  In any of the cases it is advisable to follow the market signals.