Tweezer top patterns are two-candlestick reversal patterns 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 helpful because of what it means. Knowing when a trend will end and one begins is pretty helpful. Look for the price to break below the second candle to confirm the bearish reversal.
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Tweezer Top Pattern Meaning
A tweezer top pattern consists of two candlesticks that form two peaks or resistance levels that are equal in 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 two candlestick patterns. A tweezer top occurs after the price has been moving up. Two candlesticks form highs that are almost, if not the same.
So, while perfect tweezer tops would have equal highs, it is okay if one high is a tad higher than the other.
Basics
The first candlestick should have a long, real body for the two candles to be considered a tweezer top pattern. 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. There’s a hammer candlestick next to the first candlestick in this picture.
As long as the highs of those two days are the 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.
Bullish Trends
When tweezer top patterns form, they tend to be in a bullish trend. Bullish stocks can be trading above those moving averages. When stocks get overextended, they are like rubberbands and must return to equilibrium. When you see a tweezer top form near the top of an uptrend, then look for price to reversal and want to gravitate back down to the moving average lines. This is where you’ll want to be aware of tweezer bottoms near support levels.
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Tweezer Top Pattern Trading Strategy
- Watch for 1st top candlestick to form
- Next, watch for 2nd candlestick to form a co-equal top
- Then, watch for 3rd candlestick to fall below 2nd
- Traders take a short once the price breaks below the 2nd candlestick
- Place stop at the top of the 2nd candle
- Some traders take a long position once the price breaks above 2nd candle
- Then, place stops below the 2nd candle
Tweezer Tops Example
This is an example of a tweezer top pattern on a weekly chart of $. Notice how price action formed a rising wedge. The tweezers formed at the apex point, and the price failed angular support. Traders would take a short position once the price fails the second candlestick and use a candlestick close above as a stop. The stop would be at the top of the apex point of the rising wedge.
You’ll notice that a falling wedge pattern broke out after the tweezer’s price action failed. After the price rose slightly, it failed angular resistance and continued its downtrend.
$DASH Example
This is an example of tweezer tops on a daily chart of $DASH. The large bearish candle also formed a bearish engulfing pattern as well. This took place at the apex point of the rising wedge channel. The first candle was a large doji candle, which showed indecision and that an upcoming reversal was about to happen.
Once the tweezer tops failed, a short-term falling wedge pattern turned into a nice uptrend.
Final Thoughts: Tweezer Top Pattern
Tweezer top patterns happen quite frequently on charts. It depends on what conditions the tweezer tops form in and whether they are trade-worthy. Always wait for confirmation and pair that with other trading analysis tools.
They can be continuation candles if they form 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.
Frequently Asked Questions
A tweezer top indicates that a bearish reversal is about to take place. They are two candlestick patterns with coequal tops at the top of uptrends.
A tweezer top is a bearish trading strategy when the price fails the base of the second candlestick. That's when traders take a short position or implement bearish options strategies.
Tweezer Bottoms are short-term bullish reversal patterns. Tops are short-term bearish reversal patterns. “Tweezer” comes from the Greek word for “two candlesticks.” Traditionally, a tweezer represents a top or a bottom in the market.
