Candlesticks – Tweezer Top

The Tweezer Top is a moderately reliable, bearish, reversal candlestick formation consisting of two candles that are generally seen at the end of an uptrend. The first candlestick in the pattern is a rising white candle, while the second candlestick is a declining black candle.  The Tweezer Top generally establishes a line of resistance at the high point of a weakening up trend and is often an indication the market is headed lower. 

While some candlestick chartists insist that the shadows for candlesticks in the Tweezer Top formation should be at least 60 percent as long as the body, others are of the opinion that any two candlesticks can be Tweezer Tops as long as the high price of both candles is the same.

The characteristics of this reversal pattern consists of a bullish first day, when the price of the stock or commodity continues trading higher throughout the session before ending the day at or near the day’s high. On the following day, the market opens at or near the previous day’s close and proceeds to sell off, eliminating all, or nearly all, of the previous day’s gains.

As higher prices attract more sellers, substantial selling appears, which continues throughout the trading session, thereby driving the market through the previous day’s low. The action forms a black candlestick that completely engulfs the previous day’s white candlestick body and would ideally but not necessarily include the wicks.

Traders will generally short the market using the Tweezer Top formation as a reference point, although caution is advised. According to some analysts, a Tweezer Top formation has more than a 50 percent probability of being seen before an upside breakout, making it essential to enter a well-placed stop loss order in case this occurs.

Please find below the stocks that have demonstrated a bearish Tweezer Top formation.

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