Welcome To Street Investment
By Admin
Posted on September 4, 2024
A tweezer bottom is a bullish candlestick that forms by combining two candlesticks. This candlestick indicates a short-term uptrend.
A tweezer bottom is a candlestick pattern that forms in an uptrend after a slight retracement or at a support level, where the first candle is red and the second is green. The second candlestick covers 50% or more of the first red candlestick without any upper shadow, forming a tweezer bottom candlestick.
This is a bullish candlestick, but it’s important to note that it isn’t a strong candlestick. Therefore, this candlestick tends to have a short-term effect on the market.
You need to understand the difference between a strong tweezer bottom and a weak one. Before trading on this candlestick. Here are a few points you should keep in mind, and if you do, you’ll be able to distinguish between a strong tweezer bottom and a weak one.
Now that you’ve learned the difference between a strong and weak tweezer bottom, let’s learn how to trade on this candlestick with a good winning rate.
To trade with this candlestick, you need to follow some steps that are very important. In this, it works like this: You need overall uptrend charts in a higher timeframe like 4 hours and a buying zone, then switch to a smaller timeframe like 5 min and wait for the candlestick to form. After that, make an entry with a small stop loss and a large target. Let’s understand this process in detail.
First, you need to look at an uptrend chart. For example, you can check indices, gold, or a good stock like Reliance. These all remain in a good uptrend, allowing you to backtest this candlestick in them. So, what you can do is first identify a good buying zone where the market has given a strong move for buying, and then mark this zone. You can do this work on all charts, but the situation should be that the charts are in an uptrend. Because tweezer bottoms and tweezer top are not as strong as candles like hammer and doji.
Find a good buying zone on higher time frames, which is the second step. For example, look at 4-hour or 1-hour charts and mark the zone.
Shift to smaller timeframes, like 15 minutes to 5 minutes, and find a buying zone there as well, and mark it. Now, you need to wait for the formation of a tweezer bottom or any buying candlestick, such as a hammer candlestick or doji. If you want to learn how to trade with this candlesticks, you can read further.
Once you have marked the zone and are on a smaller timeframe, if a tweezer bottom forms, you will make the entry. Use a small stop-loss and set a target based on the larger timeframe.
You can see the image for more understanding.
A tweezer bottom or any candlestick pattern does not form easily on charts; it represents the interaction between buyers and sellers in the market.
Behind this, traders’ psychology is at work. If you are buying a share, someone else is selling it to you. The seller believes that the price will not go higher, which is why they are selling. On the other hand, the buyer thinks that the price will go up further, which is why they are buying.
And the psychology behind a tweezer bottom is that when traders start booking their profits, the price goes down. Since the price is already in a good uptrend, the buyers who missed out on buying shares at lower prices become active. This leads to the formation of a tweezer bottom and other candlestick patterns.
So overall, a tweezer bottom is a short-term trend-changing candlestick pattern consisting of two candlesticks. The first candlestick is red, and the second is green, covering 50% to 100% of the first candlestick. If both candlesticks in the tweezer bottom pattern have no shadows above their bodies, it represents a strong tweezer bottom.
Got it! If you have any suggestions or face any issues, feel free to contact me. Have a great day!
Best of luck to all new traders and happy trading life!
