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Chapter 9, Part III. Simple but fundamental and important patterns. Page 2

Discussion in 'Complete Trading Education- Forex Military School' started by Sive Morten, Dec 15, 2013.

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  1. Sive Morten

    Sive Morten Special Consultant to the FPA

    Aug 28, 2009
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    Commander in Pips: Fine. So, let’s start with them:

    The first pattern is Tweezers or Spinning Tops/Bottoms. This pattern classifies to “Cautionary” group, because it neither purely reversal, nor purely continuation. Definitely speaking, it could lead to both price actions. All that it indicates is indecision condition on the market. That’s why, when market will make a decision it could follow in any side, depending on what kind of decision it will be.

    Tweezers candles have small body, usually in the middle of the candle with relatively long shadows. Like those as on the picture:


    Commander in Pips: Can you describe the price action during this pattern as we did in previous chapter, and how do you think, why it classifies as “Cautionary” and not as reversal or continuation?

    Pipruit: I think I can, besides, we’ve already familiarized with alike price action in the previous chapter… Well, long shadows tell us, that during trading period as bulls as bears had periods of power and success when they staved the counterparty. Bulls has driven back bears right to the highs, but then bears found some hidden reserves and returned status quo. Or this was vice versa – bears dominated first and bulls second. It does not matter. At the same time small bodies and close right near the open price tell us that nobody could held the final domination - neither bears nor bulls. As a result, the market was not able to find further direction. That’s why, probably, this pattern clarifies as market’s indecision and is classified as a “Cautionary” pattern.​

    Commander in Pips: Perfect, well done, Son!

    Pipruit: Thanks, Commander, and does a color of candle carry big importance?​

    Commander in Pips: And how do you think?

    Pipruit: Hm, to my mind, if market wasn’t able to find a direction either it has closed a bit higher than open (white candle) or a bit lower (black) – then the color doesn’t greatly matter.​

    Commander in Pips: Yep, So it is.

    Pipruit: Ok, I understand that this pattern tells us that neither the bears nor the bulls prevail currently, it’s a draw. But how we should treat the appearing of this pattern?​

    Commander in Pips: Although the theoretical explanation suggests that the appearance of a spinning top (i.e. after move up) tells that the power of bulls is becoming weaker and there are not so many buyers on the market as it were initially, so the reversal may occur. And a spinning bottom (i.e. during down trend) tells that the power of bears is gradually exhausting, so the reversal to upside is possible.
    Hamza Samiullah and fran alvarez like this.
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