Tweezer top patterns are a two candlestick reversal pattern with co-equal tops. This pattern can form at turning points in the market near support levels signaling a bearish reversal. Trend traders can find a tweezer top pattern to be really helpful because of what it means. Knowing when a trend is going to end and one begins is pretty helpful. Look for price to break below second candle to confirm bearish reversal.
A tweezer top pattern consists of two candlesticks that form two peaks or resistance levels that are equal height. Typically when the second candle forms, it can’t break above the first candle and causes a tweezer top failure.
Tweezer top patterns are a two candlestick pattern. A tweezer top occurs after price has been moving up. Two candlesticks form highs that are almost; if not the exact same.
So while perfect tweezer tops would have equal highs, it is ok if one high is a tad higher than the other.
In order for the two candles to be considered a tweezer top pattern, the first candlestick should to have a long real body. It does not matter if they are bearish candlesticks or marubuzo candlesticks.
The second candlestick can be any size; two candles can look a lot different from each other. Could see hammer candlesticks next to the first candlestick.
As long as the highs of those two days are same, it does not matter what the candlesticks look like. The first candle should move in the direction of the trend. The second candle can pause or completely reverse the trend. This is often the case in why doji candlesticks tend to form the second part of the pattern.
How to Trade Tweezer Top Patterns
- Watch for 1st top candlestick to form
- Next, watch for 2nd candlestick for form a co-equal top
- Then, watch for 3rd candlestick to fall below 2nd
- Traders take a short once price breaks below the 2nd candlestick
- Place stop at top of the 2nd candle
- Some traders take a long position once price breaks above 2nd candle
- Then place stop below the 2nd candle
When tweezer top patterns form; tend to be in a bullish trend. Bullish stocks can be trading above those moving averages. They need to go back to equilibrium.
Tweezer top patterns happen quite frequently on charts. It depends on what conditions the tweezer tops form in as to whether or not they are trade worthy. Always wait for confirmation and be sure to pair that with other trading analysis tools.
They can be continuation candles if they form in a pullback of a strong trend. This would allow for an entry opportunity.
When they form at the top of a trend, traders know a reversal is coming.