Posted on March 2nd, 2010
by Rapid Forex
By now you’ve received at least the equivalent of a $97 eBook for free (courtesy of Brian Campbell here at rapid forex), 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.
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.
The tweezer bottom shows two or more candles with larger wicks even at the bottom
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.
Forex Trading Tip: 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.
Quick Recap: you’ve learned the following candlestick patterns:
- The Morning Star
- The Evening Star
- The Tweezer Top
- 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!)
Posted in
Japanese Candlesticks, Technical Analysis
Posted on March 2nd, 2010
by Rapid Forex
By now you should start to be understanding a lot about japanese candlesticks and how to use them in patterns to trade. I’m continuing to explain these patterns to you so you become a proficient forex trader. Soon, I’ll be showing you how these patterns are used in actual trading, but you need the theory first.
The second candlestick pattern that can be a very useful tool in spotting potential trend reversals is the tweezer top (and it’s partner, the tweezer bottom).
The tweezer top formation, as its name suggests, reveals the end of an uptrend and the beginning of a downtrend (a top).
A tweezer top formation has the following characteristics: two or more candles (dojis or spinning tops) of roughly equal height with long upper 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.
Notice how the top of the wicks align to form a tweezer top uptrend reversal signal
If you identify a tweezer top and decide to trade it, sell at the opening of the candle that follows the second high candle in the tweezer top formation.
Forex Tip: Set your protective stop loss order at the last level of resistance (which will be the tweezer top’s high).
As with any indicator, trading on a convergence increases the probability that you will profit from your trade. If you spot a tweezer top, look for the trendline break or another indicator to provide more reason to believe that the market is reversing.
Can you guess what’s coming next? The tweezer bottom is the upside-down version of the tweezer top. The more examples you see of these candlestick patterns, the more useful they will be to you.
Posted in
Japanese Candlesticks, Technical Analysis
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