Introduction to Tweezers Candle Formation
Tweezers formation consists of two or more candles that either their high or their low is almost at the same level. They could represent resistance or support levels in the chart or at least those instances that the market pauses for a while. If they appear at the extreme levels of trending markets they could represent reversal or correction in the trend. In my opinion while Tweezers is a useful pattern it could turn out to be misleading at times. Tweezers patterns represent continuation from time to time instead of reversal. You need to use other methods to confirm their reversal signals.
Tweezers Bottom Formation
Tweezers Bottom occurs when two or more consecutive candles' lows match (see image). In reality the lows could be slightly different. The candle types could vary from long real body candles to spinning tops to doji. If the first candle is a long black candle followed by a doji then the reversal sign could be more reliable. This pattern could be a reversal sign when appears at the bottom of a downtrend but I strongly suggest using other methods such as technical indicators or other chart formations to confirm it.
Tweezers Top Formation
Tweezers Top occurs when two or more consecutive candles' highs match (see image). In reality the highs could be slightly different. Just like Tweezers Bottoms the candle types could vary from long real body candles to spinning tops to doji. If the first candle is a long white candle followed by a doji then the reversal sign could be more reliable. This pattern could be a reversal sign when appears at the top of an uptrend. Nonetheless, I strongly suggest using other methods such as technical indicators or other chart formations to confirm the reversal.
Tweezers tops and bottoms are not my favourite patterns but they could turn out very useful from time to time.
Locating the Tweezers Formation in a Chart
I have developed a custom indicator for MetaTrader 4 that locates Tweezers Bottoms and Tops in a forex chart. The indicator shows Tweezers Bottoms with green arrows on top of the candles and Tweezers Tops with red arrows below the candles. If there is more than one arrow shown then it means that there are more than two candles involved in the pattern. This could be a sign of a more reliable reversal opportunity (see image).
The indicator includes an external variable deviation_percentage which helps the indicator to recognize the level of deviation of highs or lows from a specific levels. In other words if this variable is zero 0 then the highs or lows of the pattern candles must be exactly the same, but if you increase this value then they could be different. The default value is 5 which means a 5% deviation.
Download the Tweezers Indicator [download]
Click here to download the compiled version of this indicator. I have designed the indicator for MetaTrader 4 (MT4). If you are not using the latest build of MT4 then you may encounter technical problems. Click here for more information and possible solutions.
If you are not familiar with using custom indicators then click here.
If you are one of my MQL students you may download the source code of this indicator from your training site. Click here for more information about my MQL training program. You may also click here for more information about different options that I offer for training MQL (one of them is absolutely free).
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