Question: What is the proper strategy when Tweezers pattern appears in Candlestick chart?
Here is an example of strategy when you see the appearance of the Tweezers pattern filtered by RSI at the overbought area, during the course of a rally.
Consider selling when the next candle falls below the low price of the black candlestick.
Consider placing a protective stop loss at the top of the pattern.
Take-Profit strategy is heavily dependent on the trading profile of each individual:
- Close 50% of the position when price travels 100% the length of the pattern, then close the remaining 50% when price reaches the 200% of the pattern or at the presence of a reversal candlestick pattern below the SMA(20).
- Other combinations may be applied.