The Tweezer Bottom Candlestick Pattern

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:

1. The Morning Star
2. The Evening Star
3. The Tweezer Top
4. 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!)

.