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Chapter 9, Part III. Simple but fundamental and important patterns. Page 3

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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    Notwithstanding, Tweezers are not a reversal pattern. Although their appearing on tops or bottoms is more often than in the middle of some move, we highly recommend treating them as indecision. Because tweezers itself does not show the future direction, and what decision the market will make, who knows… Just look at the chart #1 – you can see that tweezers appear in different places, as before continuation as before reversal.

    #1 Swiss franc futures Daily chart

    Treat them as a pause, after which can follow the continuation or reversal.

    Pipruit: Well, Commander, don’t you think that after any candle could follow either continuation or reversal?​

    Commander in Pips: If we are talking purely about candles – so it is. As we’ve said, there is no 100% assurance in any expectation. But still, patterns shift the probability in our favor, second, our task here is to study how to recognize patterns and what they mean, third, by your question you’ve just confirmed our notice – do not rely just on some single tool in trading.

    Pipruit: All right, but can you give me just simple example, how it could be done – a combination of different tools, just to not rely on single one? Using only with stuff that I know already…​

    Commander in Pips: Ok, here is your example. What tweezer has greater importance, those that have appeared in, say, free space of the market or those one that has appeared at a support/resistance area?

    Pipruit: At support/resistance of course. And there is a greater probability that it will lead to reversal rather than to continuation…. Way cool!​

    Commander in Pips: See – you’ve answered by yourself. And now imagine that you know not just spinners and lines but many more different tools that could be used for decision making. Each tool allows you to shift probability in your favor a bit. Using patterns in this context are much more safe and useful.

    Pipruit: Finally, Commander I understand what you are talking about. But, in general, how we can understand purely by pattern where the market will go?​

    Commander in Pips: In general, any pattern treated as triggered one, when market shows close above or below it. For example, let’s assume that we see spinning top, as on the chart #1. You can enter short, when market will close below the low of tweezer, i.e. below the lower shadow. This has happened with first nasty black candle to the down side. The same has happened, when tweezer appeared in the middle of down move. See, on the next day market has closed below tweezer’s low.

    But now we are speaking in general – where is the trigger of any pattern. Still you can find some tweezers that failed. For instance – the last group of spinning bottoms on the chart #1. See, market has closed below it, but then reversed up.

    Pipruit: Yes, Commander, I’ve asked in general only. I remember that we should not use any tool as a single one for trading.​
    Hamza Samiullah and fran alvarez like this.
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