How to Read Tweezers Tops and Tweezers Bottoms Candlestick Patterns

TWEEZERS TOPS AND BOTTOMS

Tweezers are two or more candle lines with matching highs or lows. They are called tweezers tops and tweezers bottoms because they are compared to the two prongs of a tweezers. In a rising market, a tweezers top is formed when the two or more con­secutive highs match. In a falling market, a tweezers bottom is made when two or more successive lows are the same. The tweezers could be composed of real bodies, shadows, and/or doji. Ideally the tweezers should have a long first candle and a small real body as the next session. This shows that whatever force the market had on the first session (bullish force with a long white candle and bearish force with a long black candle), it was dissolving with the following small real body with the same high (for a tweezers top) or same low (for a tweezers bot­tom). If there is a bearish (for a top reversal) or a bullish (for a bottom reversal) candle signal that is also a tweezers top, it adds more importance to the pattern.

Let's look at Exhibits 4.8 to 4.13 in detail:

Tweezers Top and Harami cross

Exhibit 4.8. Tweezers Top and Harami cross

ü  Exhibit 4.8 shows how, during an ascent, a long white line is followed by a doji. This two-candle pattern, a harami cross with the same high, can be a significant warning.

Tweezers Top and Hanging Man

Exhibit 4.9. Tweezers Top and Hanging Man

ü  Exhibit 4.9 illustrates a tweezers top formed by a long white candle and a hanging man line. If the market opens, and especially closes, under the hanging man's real body, odds are strong that a top has been reached. This two-line mixture can also be considered a harami. As such, it would be a top reversal pattern during an uptrend.

Tweezers Top and Shooting Star

Exhibit 4.8. Tweezers Top and Shooting Star

ü  Exhibit 4.10 illustrates a tweezers top joined with the second period's bearish shooting star line.

Tweezers Top and Dark-Cloud Cover

Exhibit 4.11. Tweezers Top and Dark-Cloud Cover

ü  As mentioned earlier, an ideal tweezers would have as its second session not only the same high, but also a small real body. In Exhibit 4.11 the second candle is not a small real body. However, this second session completes a variation on the dark-cloud cover (the second day opens above the prior day's close instead of above the prior day's high). The black candle session's high also just touches the prior period's high and then falls. Because of this last fact—that is, both sessions have the same highs—it adds more negative impact to this variation of the dark-cloud cover.

Tweezers Top and Hammer

Exhibit 4.12. Tweezers Top and Hammer

ü  Exhibit 4.12 shows a hammer session that successfully tests the prior long black candlestick's lows. The hammer, and the successful test of support, proves that the sellers are losing control of the market. This two-line combination is also a harami. This would be another reason to view this action as support.

Tweezers Top and Harami cross

Exhibit 4.13. Tweezers Top and Harami cross

ü  Exhibit 4.13, while it doesn't have a small real body for the second candle, does complete a variation on the bullish piercing line. (A true piercing line would open under the prior day's low. Here it opened under the prior day's close.) Because of this I view it also as a tweezers bottom.

These examples of tweezers are not inclusive. They are representative of how top and bottom tweezers should be confirmed by other candlestick indications so as to be valuable forecasting tools.

Tweezers should be viewed differently for daily, intraday, and weekly or long charts. This is because there is nothing potent about having the same highs or lows for two daily or intraday sessions. It's only if these sessions also meet the specific criteria for a tweezers (the first long, the second short, or a candle pattern with the same highs or same lows) does it warrant attention. As such, the main aspect to keep in mind with tweezers on a daily or intraday chart is that it takes a special combination of candle lines to warrant acting upon tweezers.

For those who want a longer time perspective, tweezers tops and bottoms on the weekly and monthly candlestick charts made by consecutive candlesticks could be important reversal patterns. This would be true even without other candle confirmation because, on a weekly or monthly chart, for example, a weekly low this week that successfully holds last week's lows could be a base for a rally. The same can't be said of daily or intraday lows.

Exhibit 4.14 shows the tweezers bottom. Note that the second real body of this tweezers was not within the first real body and as such was not a harami pattern. The long white candle after these tweezers on June 1 was immediately followed by a small real body with about the same high near $59.50. As such, the June 1 and June 2 combination can be viewed as the tweezers top. But in the context of the overall technical picture, the market was not overextended and, as such, not so vulnerable to a correction as should be the case if we had a tweezers top in an overbought environment. Even if one acted upon the June 1 and June 2 tweezers top (it was also a harami), once the market closed above the high of these two sessions on June 3, any potential bearish implication of the tweezers top was negated.

In Exhibit 4.15 a series of falling gaps (gaps are called "windows" in candle charts; windows are discussed in detail in Chapter 5) at 1,2, and 3 kept the bearish momentum in force. A tweezers bottom unfolded with the second candle of the tweezers bottom a hammer. A dark-cloud cover in the week of the

Exhibit 4.14. Caterpillar-Daily (Tweezers Bottom)

Exhibit 4.15. Gergia-Pacific-Daily (Tweezers Bottom)

Exhibit 4.16. Dell-Daily (Tweezers Top)

18th showed that the upward power of the market was dissipating.

Exhibit 4.16 illustrates a tweezers top. Since the small real body on February 2 was not within the prior real body, this would not have been a harami pattern, but it was a tweezers because of the same high at $55. In addition, the small real body on February 2 was a hanging man line (the upper shadow is small enough to keep this as a hanging man line). Of course, this (like any hanging man line) required bearish confirmation by a close under the hanging man's real body. This occurred the next session.

Dell descended from these tweezers top until a series of hammers in late February-early March showed an area of stabilization. The first two hammers on February 26 and March 1 were not a classic tweezers bottom. Why? While they certainly have the same lows, the duel hammers did not meet one of the normal criterion for a tweezers bottom—having the first candle of the tweezers bottom a long real body. While the dual hammers on February 26 and March 1 were not classified as a tweezers bottom, I certainly would emphasize their importance since

Exhibit 4.17. Commerce Boncorp

Exhibit 4.18. Network Solutions-Daily (Tweezers Top)

they underscored how the market was rejecting lower prices at $39 with bullish long lower shadows. As such, I would view the pattern on February 26 and 27 as a variation of a tweezers bottom.

While the two candle lines on December 22 and 23 in Exhibit 4.17 did not form a dark-cloud cover (since the black candle wasn't even near the middle of the long white candle), they did form a tweezers top. While I would view a dark-cloud cover as more ominous than a tweezers top (since the regular dark-cloud cover closes well into the white candle), this tweezers top could certainly be viewed as a cautionary signal. This was echoed the next week with the small real bodies and doji reflecting that the market had gone from a bullish bias to more neutral.

A bullish engulfing pattern at B in Exhibit 4.18 lays the foundation in early February for a rally that continued via a gap on March 6. As discussed in Chapter 5, the bottom of a rising gap can become support. The support at the bottom of this gap near $185 held very well, as attested by the long lower shadow candle of March 8.

On March 10, near $250, a small real body produced a harami pattern. Since the two candle lines of the harami had the same highs, it was also a tweezers top.