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enochbenjamin

Tweezers & Shooting Stars

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EB,

Do you filter these trades at all by watching the speed of the pullback/price movement or the number of times the top end of the tweezers are touched during the 10 minutes it takes for these to show up on your chart. Just curious.

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Hi All,

 

I just wanted to add to the discussion about Tweezer Tops or Tweezer Bottoms that the reliability of them increases when they occur as dual candlestick pattern signals (see chart attachment). For example, a tweezer top with an engulfing price action is a dual trade signal in comparison to a tweezer top with no other candlestick pattern being involved.

 

Also, arguably just as important, don't forget that these tweezer tops or bottoms contain a wealth of information besides just being a trade signal. They actually setup a way to identify key changes in supply/demand areas that can be used to confirm trades that occur afterwards within those key price areas. In addition, those key price areas can be used as profit targets for trades taken below or above those key areas.

 

The key areas I show on my chart are all volatility spikes out of contracting volatility. They represent a key change in supply/demand. Therefore, even if you don't trade the tweezer for whatever reason...they can still be very useful to help with managing other trades that occur afterwards.

 

Expansion --> Contracting --> Expansion

 

M.A. Perry

(formerly known as NihabaAshi)

030310_SPY_Exchange_Traded_Fund_Tweezer_Top_Japanese_Candlestick_Pattern.thumb.png.5061be8c8a33e14abb9bca40684d6a2e.png

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EB,

Do you filter these trades at all by watching the speed of the pullback/price movement or the number of times the top end of the tweezers are touched during the 10 minutes it takes for these to show up on your chart. Just curious.

 

I am definitely watching - I only enter with limit orders. The last minute to 30 seconds of the candle formation is the most important and will sometimes provide hints as to what is going on.

 

Remember that the 2nd SD is a high probability exhaustion point - so even if you just entered with a stop it is a low risk/high probability trade. Under normal circumstances you'll know if the trade was good in less than 5 mins.

 

The main reason I watch and enter with limit orders is because I am trying to keep my risk very small. Ideally 5 ticks but almost never more than 10. Most of the time I am happy with 10 ticks, but in the cases when I do let her ride, as soon as 10 ticks are booked I move my stop to break even and then trail each with the stop 1 tick above the previous candle.

 

I know its more than you asked for, but....

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Hi All,

 

I just wanted to add to the discussion about Tweezer Tops or Tweezer Bottoms that the reliability of them increases when they occur as dual candlestick pattern signals (see chart attachment). For example, a tweezer top with an engulfing price action is a dual trade signal in comparison to a tweezer top with no other candlestick pattern being involved.

 

Also, arguably just as important, don't forget that these tweezer tops or bottoms contain a wealth of information besides just being a trade signal. They actually setup a way to identify key changes in supply/demand areas that can be used to confirm trades that occur afterwards within those key price areas. In addition, those key price areas can be used as profit targets for trades taken below or above those key areas.

[/b]

 

M.A. Perry

(formerly known as NihabaAshi)

 

Great addition. Thanks.

 

Can you expand upon how you identify supply/demand areas?? Do you identify them with just the candle formations or in combination with cumulative delta?

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Another loose definition of the profile showing when price moves out of value as a possible way to filter. This chart would be based on today, taking into account yesterdays Market Profile; above 8095 would be a short as this thread is only about shorts (sell stop moving up with price).

 

Price did not trade through value area as expected however the vwap is a great place for a scale.

 

Chris

 

attachment.php?attachmentid=19813&stc=1&d=1267651931

MarketProf.thumb.PNG.92053c43eedec142672fa64243f1cfbf.PNG

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I use contraction / expansion analysis...a sub-group of volatility analysis to identify key changes in supply/demand.

 

Expansion Interval --> Contraction Intervals (3 minimum) --> Expansion Interval

 

Each expansion interval is a volatility spike above/below the prior contraction intervals. Basically I want to see a volatility spike (expansion interval sometimes called the alert interval) and then I want to see the intervals after it began to contract as in small in their range in comparison to the expansion interval. Next, I want to then see another volatility spike (expansion interval) that breakout above or below the range of the contraction intervals...the first volatility spike after the tweezer top or tweezer bottom gets designated as the "confirmation" of a change in supply/demand even though the actual change may have occurred at the tweezer top or tweezer bottom.

 

However, if someone doesn't like contraction / expansion analysis...they can use the range of the tweezer top or tweezer bottom as the change in supply/demand but only after seeing a "confirmation" price action afterwards.

 

Also, the change in supply/demand doesn't only imply a change from supply to demand or a change from demand to supply. It also implies supply (it's volatility) suddenly spiking or demand (it's volatility) suddenly spiking...all are changes in supply/demand.

 

Last of all, I often call these expansion intervals as WRB's (wide range bars or wide range bodies). There's other discussions here at traderslaboratory about WRB's.

 

M.A. Perry

 

Great addition. Thanks.

 

Can you expand upon how you identify supply/demand areas?? Do you identify them with just the candle formations or in combination with cumulative delta?

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Nice to see emphasis on price dynamics rather than vanilla patterns. WRBtrader's post reminds me of Dunnigans' one way formula for some strange reason. I guess it's because one of D's sequences is double bottom inside bars (contraction I guess) and then thrust (WRB).

 

It's also nice to see someone using Jerry's market stats stuff. I have revisited it recently and am even more impressed how robust it has been. On holiday so not been contributing much, but am enjoying this thread.

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Today there were 4 tweezer/shooting star set ups in CL. I only took the last one (+35). The reason I did not take the beautiful shooting star is because the risk would have been too great for my style. I put the SL 1 or 2 ticks beyond the candle that provides the star/tweezer. The reason I did not take the next two tweezers was because price was well beyond the 2nd SD and to me that was in no mans land - scary! The third set of tweezers was also outside of the 2nd SD but it was not so far away and was just coming out. It was a judgement call. Shorted at 8100 with a 8 tick stop. Because it was the end of the day I decided to ride her down to the 1st SD + some. From the way things ended I got out just in time.

 

attachment.php?attachmentid=19809&stc=1&d=1267645935

 

A side note on the above tweezers. I don't like em. I prefer for tweezers to have long wicks. However, according to the candlestick sensei Steve Nison "Tweezers are two or more candlestick lines with matching highs or lows." He goes on to state "The tweezers could be comprised of real bodies, shadows, and or doji." (page 88, Japanese Candlestick Charting Techniques)

 

How have your setups been working lately? Are you still mainly trading these or have you made adjustments? I usually don't watch CL....

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5207691_13620534544260_rId11.jpg

 

The DAX is up 0.86% today and its on a bullish trend after sliding as the week started.

 

There was a shooting star formation that can be seen in the chart. The MarketWatch monthly chart of the DAX shows that the long term support line was touched a couple of weeks back. It turned out to be the neckline for the reversal that occurred. The current global economic stability and over performing US financial markets have propelled the DAX to the highs it hit a month back.

 

Read the rest of the article: DAX Will Reflect German Economic Power In The EU - Seeking Alpha

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