Tweezer bottom patterns are two candlestick patterns found on stock charts. The tweezer bottom pattern can be seen as a reversal in a downtrend. Watch our video below to learn more about tweezer bottoms.
You may see the tweezer bottom at a turning point in the market or at a reversal of a stock. This pattern formation can allow for precision trading by trend traders.
Charts are made up of candlesticks that help you get a pulse on the feelings of other traders. Trading is a tug of war between buyer and sellers.
Moreover candlesticks tell a story whether they are high wave candlesticks, dragon fly doji candlesticks or hammer candlesticks. The importance of knowing candlesticks coupled with other tools gives you more understanding of what stocks will do.
Tweezer bottom patterns usually occur while the stock is in a downtrend. When you see a tweezer bottom be on the lookout for a reversal. Price should move up.
The move up in price may not be drastic but a change in trend is indicated. A tweezer bottom pattern occurs when there are two days with equal lows. Now we know it may not be perfect so one of the two lows may be a tad bit different.
That’s ok as long as it isn’t too different. They need to be pretty similar. This hammers out a pretty key support level.
Tweezer bottoms are made up of 2 candles. The first candle should be a part of the current trend. In a perfect world the first candle would have a long real body. We know that that may not always be the case.
The second candle can be any size or shape. The 2 candlesticks are probably going to look different. As long as they have the same lows to form the pattern that’s fine.
You may see different types of doji candlesticks forming the second candle. Hence the importance of knowing what they mean. They’re clues.
Candlesticks of all kinds group together to form patterns. There are large patterns and smaller patterns inside those large patterns.
The large patterns give you a glimpse of a long term move that could occur. Comparatively, there are smaller patterns within that allow you to trade in the short term.
It’s important to remember that patterns break down all the time. That’s why you need conformation or be willing to take a risk. Sometimes the risk works out and sometimes it doesn’t.
Tweezer bottom patterns tend to be a sign of a reversal but we know that sometimes that may not be the case. You could find a tweezer bottom but the stock pauses then continues the trend.
Technical indicators can help confirm moves. Tweezer bottoms form pretty key support levels. The stock has made two consecutive lows that the bears weren’t able to break.
Take a look at where the candles are compared to the moving average lines. Look to see if RSI is oversold. An oversold stock is going to correct and start having buyers come back in.
The moving average lines form equilibrium for stocks. If a stock moves away from it’s equilibrium it’s going to come back to it. It may not happen right away but it will happen.
All of these things traders are aware of. They obey support and resistance as well as moving average lines.
Tweezer bottom patterns can be one of two things. It can be part of a pullback during the continuation of a trend or it can signal the reversal of a trend.
Confirmation of what a stock will do is always good to practice before placing an order. Sometimes waiting for confirmation can make you feel like you’ve missed out on a bigger move.
That’s a whole lot better than thinking a stock is going to reverse when it ends up continuing in a trend. Traders trade greed and fear. Don’t allow your greed or fear to be someone else’s profit.
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