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Thomas Bulkowski’s successful investment activities allowed him to retire at age 36. He is an internationally known author and trader with 30+ years of stock market experience and widely regarded as a leading expert on chart patterns. He may be reached at

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Bulkowski's Tweezers Top

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Market
Industrials (^DJI):
Transports (^DJT):
Utilities (^DJU):
Nasdaq (^IXIC):
S&P500 (^GSPC):
As of 04/21/2017
20,548 -30.95 -0.2%
9,134 7.68 0.1%
706 4.81 0.7%
5,911 -6.26 -0.1%
2,349 -7.15 -0.3%
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7.0%
9.8%
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Tom's Targets    Overview: 04/17/2017
20,100 or 21,150 by 05/01/2017
8,500 or 9,500 by 05/01/2017
725 or 685 by 05/01/2017
5,950 or 5,650 by 05/01/2017
2,275 or 2,425 by 05/01/2017
Mutt Winners: None YTD

Written by and copyright © 2005-2017 by Thomas N. Bulkowski. All rights reserved. Disclaimer: You alone are responsible for your investment decisions. See Privacy/Disclaimer for more information.

Tweezers Top: Summary

Tweezers top candlesticks are simple to find in a historical price series. Just look for two adjacent candles with the same high price in an uptrend. Candle theory says that the pair is supposed to be a bearish reversal because it illustrates overhead resistance, but my tests show that tweezers tops actually act as bullish continuations 56% of the time. That performance is, of course, near random. Thus, expect the breakout to be in any direction. With an overall performance ranking of 81 (where 1 is best), that suggests the price trend after the breakout is weak.

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My book, Encyclopedia of Candlestick ChartsEncyclopedia of Candlestick Charts book., pictured on the left, takes an in-depth look at candlesticks, including performance statistics.

If you click on this link and then buy the book (or anything) at Amazon.com, the referral will help support this site. Thanks. -- Tom Bulkowski

 

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Tweezers Top: Important Results

Theoretical performance: Bearish reversal
Tested performance: Bullish continuation 56% of the time
Frequency rank: 35
Overall performance rank: 81
Best percentage meeting price target: 65% (bull market, up breakout)
Best average move in 10 days: -3.21% (bear market, down breakout)
Best 10-day performance rank: 42 (bull market, down breakout)

All ranks are out of 103 candlestick patterns with the top performer ranking 1. "Best" means the highest rated of the four combinations of bull/bear market, up/down breakouts.

The above numbers are based on hundreds of perfect trades. See the glossary for definitions.

The ideal tweezers top candlestick
Tweezers Top
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Tweezers Top: Discussion

Any pair of candlesticks qualify as tweezers tops providing they have the same high price and appear in an upward price trend. The belief behind the candle pattern is that the twin high price marks overhead resistance. But the resistance is weak and price closes above the pattern 56% of the time, based on the 20,000 tweezers top patterns that I studied.

Only 65% of the candles meet their price targets in a bull market after an upward breakout (and that is the best showing among the four combinations of bull/bear market and up/down breakouts). The target is the candle's height projected upward from the top of the candle. That comparatively poor performance (best would be a hit rate of over 90%) suggests that the price trend after the breakout is weak. In fact, the best average move over a 10 day spread is a drop of 3.21%, and that happens after a downward breakout in a bear market.

Tweezers Top: Identification Guidelines

CharacteristicDiscussion
Number of candle linesTwo.
Price trend leading to the patternUpward.
ConfigurationLook for two adjacent candlesticks with the same (or nearly the same) high price in an uptrend.
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Tweezers Top: Three Trading Tidbits

If you want a few bones from my Encyclopedia of candlestick charts book, here are three to chew on. The pages refer to the book where the tips appear.

  1. Tweezers top candles that appear within a third of the yearly low perform best -- page 840.
  2. Tweezers top candles with tall upper and lower shadows tend to do well -- page 841.
  3. For best performance, trade in the direction of the prevailing price trend -- page 842.

Tweezers Top: Example

The tweezers top candlestick on the daily scale

If you believe candle theory, a tweezers top candlestick highlights overhead resistance. Pictured in the chart is an example of a tweezers top (circled in red) in which price continues moving higher. In fact, an upward breakout (which occurs when price closes above the top of the candle pair) happens 56% of the time. That means the candle acts as a reversal 44% of the time. Both values I consider near random, so you will likely not be able to accurately guess the breakout direction with any certainty.

In this example, the first day is a tall white candlestick followed by a short black one. Both appear in an upward price trend and both have the same high price. The next day price closes higher, above the tweezers top, staging an upward breakout. Price continues rising. Notice how the tweezers top appears almost midway into the up trend. With chart patterns such as flags and pennants, they often mark the middle of an upward trend so you can better guess when the trend will pause or even reverse.

-- Thomas Bulkowski

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Written by and copyright © 2005-2017 by Thomas N. Bulkowski. All rights reserved. Disclaimer: You alone are responsible for your investment decisions. See Privacy/Disclaimer for more information. On the journey of life, I choose the psycho path.