Tweezer Bottom in Taiwan Semiconductor

Published on Monday, 19 December 2011 05:00 Written by Christian Paolinetti

New York, December 19th (TradersHuddle.com) - Shares of Taiwan Semiconductor Manufacturing Company Ltd. (NYSE:TSM) ended the trading session higher by $0.24 or 1.92% from its previous close. Taiwan Semiconductor's price action developed what can be considered a reversal pattern in the form of a tweezer bottom, which is a candlestick pattern that is usually formed at the end of a downtrend. The tweezer bottom is considered a reversal pattern, so traders will need to monitor the the price action for confirmation.

Taiwan Semiconductor Manufacturing Company Ltd. (NYSE:TSM) manufactures integrated circuits based on its proprietary designs. The Company offers a comprehensive set of integrated circuit fabrication processes to manufacture CMOS logic, mixed-mode, volatile and non-volatile memory and BiCMOS chips. Taiwan Semiconductor is an affiliate of Philips Electronics N.V.

Traders looking for an entry in Taiwan Semiconductor can use the tweezers as a good reference point to establish the long position, as the pattern provides defined risk by giving a good reference point for support.

Traders are always looking for tweezer bottoms as they give an entry with a small risk defined, they are a leading indicator that provides an alert for a trend reversal or stabilization. The tweezers imply that bears or sellers were not able to push the stock lower, therefore providing the opportunity to look for a bounce. Below an example of Tweezer Bottom reversal patterns: