There is another strong trend reversal signal – tweezer. This combination represents two differently directed candles with the same extremes: in the downtrend, the tweezer candles have the same low, in the uptrend, correspondingly, the same highs. The values ​​of lows and highs in the tweezer can be both the closing prices of candlesticks and their shadows. In addition, candlesticks in the combination can either follow one another, or include one or more candles tradeween them. The advantage of the tweezer combination is that it provides an explicit and strong enough signal. When this pattern is found in other candle combinations, the signal strength increases.

Trader’s actions when the signal is formed:

• 1) Wait for the appearance of a candlestick with the same extremes in the price chart, prepare for the possible change in the direction of movement.
• 2) Upon completion of the formation of the tweezer, you can buy an option in the new price direction.

Buying a call option after the tweezer has been formed

Tweezer with bullish engulfing

Since the appearance of the tweezer in the chart is a strong signal, you can act without waiting for its confirmation by the next candlestick, especially when the pattern is formed near resistance or support levels. But if you are not sure about the certainty of the situation on the market, you can wait for the appearance of a new candlestick and make sure that the choice of the trade direction is correct. As a rule, in most cases, the presence of a confirmation signal helps traders save profits.

Tweezer Trading Strategy Day Trading Strategies Trading Guide