Tweezers: the main varieties of the pattern
We continue to study the features of model identification
In the previous material, we studied in detail the features of the formation of the “Tweezers” pattern and described individual trading strategies for this price action model. Traders probably began to pay increased attention to the same extremes at two (or more) adjacent bars. Today I would like to talk about varieties of graphical configuration. In fact, values can have not only highs (lows) but also the sizes of bars. Based on the range (spread) included in the Tweezers, the bars are distinguished: TBH, TBL, DBLHC, and DBHLC – designs.
TBH (Two Bar Highs) is a combination of two or more bars with the same highs. In various sources, I met different approaches to its identification. Some authors believe that the size of the bars does not matter, while others, on the contrary, focus on the smaller size of the second bar of the model. Ideal option – it is not less than twice the first. TBL (Two Bar Lows) is the exact opposite of the previous Tweezers. This is a combination of bars with the same lows.
TBH and TBL bars
Several TBL bars were formed on the daily AUD / USD chart: in May and October 2019. The last of them was significantly smaller than the previous one (in the first example the first of three, in the second – the first of two).
TBL bars on AUD / USD chart
If you find this kind of tweezers, you should be prepared for a two-way entrance. Pending orders should be placed at the very bottom of the pattern and at the maximum level of TBL. In both cases, a buy-stop worked with the Australian dollar. It makes sense to set a protective stop order at the minimum level of the current fluctuation. Various methods are used for profit-taking, including a floating stop.
TBL Bar Strategy
DBLHC (Double Bar Lows Higher Close) – Tweezers consisting of two or more bars with the same minimum, the closure of the last of which is above the maximum of the previous bar. By analogy with DBLHC, DBHLC (Double Bar Highs Lower Close) – Tweezers, which include two or more bars with the same maximum, closing the last of them is located below the minimum of the previous bar.
DBLHC and DBHLC – bars
On the daily USD / JPY chart, both types of external bars were formed, as DBLHC and DBHLC Tweezers can be called differently. This happened in August and September. The spreads of the second bars of the pattern were significantly wider than those of the first.
DBLHC and DBHLC – bars on the USD / JPY chart
Unlike internal bars, external-style tweezers have only one entry point. At maximum for DBLHC and minimum for DBHLC. So traders who identified the Tweezers on the USD / JPY chart in the first half of August had to wait until September before the pending buy order worked. Patience is an important quality of a strong trader. It is not surprising that it paid off handsomely in the first example with the Japanese yen. In the second, the profit turned out to be much less, however, it should be recognized that the tweezers gave the right signal to enter the short. In both cases, protective stop orders should be placed at the extreme level of recent price clusters.
Strategies for working on DBLHC and DBHLC bars
Thus, if you find two or more bars with the same highs (lows) on the chart, then you assume that we are talking about the “Tweezers” pattern. In the future, you should determine its variety and act in accordance with the knowledge base at your disposal. Let me remind you that in constructing the strategy, various auxiliary tools of technical analysis can be used, including Fibonacci ratios, Pivot levels, and others.