By now you’ve received at least the equivalent of a $97 eBook for free, with the last 5-7 blog posts. As you can see, I’m building a foundation here and it’s going to get increasingly more exciting as we move toward actual Forex trading.
Now that you know the tweezer top candlestick pattern, it’s time to learn the tweezer bottom candlestick formation.
What is a Tweezer Bottom Candlestick Pattern?
The tweezer bottom formation implies a bottom (surprise!) – This is the opposite of a tweezer top. As a potential bottom, the tweezer bottom signals the end of a downtrend and the beginning of an uptrend.
A tweezer bottom formation has the following characteristics: two or more candles (dojis or spinning tops) of roughly equal height with long lower wicks (the wicks must make up at least 60% of the entire candle). The two (or more) candles can be bullish, bearish, or a combination of both.
If you identify a tweezer bottom and decide to trade it, buy at the opening of the candle that follows the second low candle in the tweezer bottom formation. Set your protective stop loss order at the last level of support (which will be the tweezer top’s low).
As with any indicator, trading on a convergence increases the probability that you will profit from your trade. If you spot a tweezer bottom, look for the trendline break or another indicator to provide more reason to believe that the market is reversing.
By now, you’ve learned the basic candlestick patterns like: The Morning Star , The Evening Star , The Tweezer Top and The Tweezer Bottom. This gives you a solid fundamental understanding of Japanese candlestick patterns.
In my next post I will give you 8 rules that you can use to trade Japanese candlestick patterns. After that, I’ll be posting a lot about support and resistance (some of my favorite topics!)
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