On a crypto candlestick chart, there are countless patterns to look out for which can signal certain upcoming market movements. A tweezer pattern is an indication that the market is at either a high or low and is about to reverse, at least for the short-term future. To understand how to spot a tweezer top or tweezer bottom, it’s important that your first know how to read a candlestick chart.
What is a Tweezer Top?
A tweezer top is formed during an upward trend where a green candle is followed by a red candle which opens at the closing price of the green candle, giving the appearance of a pair of tweezers. The pattern suggests that buyers weren’t able to push the price above the close of the previous day and that a new downward trend may be on the horizon. A tweezer top can, in some circumstances, consist of more than just two candles. The important thing to look for is that the top of the candle bodies are at the same price as this shows a lack of buying power to continue the upward trend. A tweezer top is considered a sign that a bearish reversal is inbound.
What is a Tweezer Bottom?
A tweezer bottom is the opposite of a tweezer top. There is a visible level in a downward trend which two or more candles fail to break below. There can be downward wicks on these candles but the important thing is that the bodies stick to the same lower level. A tweezer bottom is considered an indication of a short-term bullish reversal, which could be ideal for scalp traders.
How to Trade on a Tweezer Pattern
As a tweezer bottom is considered to suggest a short-term reversal, it may not be the best signal to place big trades on. Scalpers may be able to capitalise on the appearance of a tweezer bottom but, other than that, it’s a good idea to look out for other signals to back it up. A tweezer top, on the other hand, is considered to be a fairly reliable signal of a bearish reversal so definitely thing about jumping out of those long positions and compounding your profits if you see one. We’re not saying that you should blindly act on the appearance of the pattern but definitely set some time aside to study the market before the potential reversal happens.
A tweezer pattern can appear somewhat regularly on a candlestick chart with it being a pattern of only two candles. Traders are always better off understanding market cycles and knowing which patterns to give more weight to during certain times of these cycles. Using momentum indicators and other technical charts can help give a better understanding of investors’ psychology and ultimately better predict what movements the market will make next. Educating yourself on how to use these technical tools and which other patterns to look out for on the charts can suggest which signals to act on and which to simply watch.