Dual Candlestick Patterns in Forex

In the previous blog, you were made familiar with different single candlesticks patterns that gave both continuous and reversal signals.

But what’s better than patterns with single candlestick patterns?

Patterns with TWO candlesticks!!!

But you know what that means! Double the candlestick patterns, double the trouble…

Even though memorising a double candlestick pattern can be a bit more challenging, the trading results can be very rewarding. 

As in swimming in a pool of money rewarding… If you do it right, of course. 

Now that I have your attention, let’s get to it!

Dual Candlestick Patterns

Similar to the single Japanese candlestick patterns, Dual Candlestick Patterns come in a few various types and in bullish and bearish versions.

• Engulfing Candles (Bullish Engulfing and Bearish Engulfing)
• Tweezer Bottoms and Tops

What Are Engulfing Candles?

The engulfing pattern is a strong reversal signal in technical analysis that can be bullish or bearish and is composed of two candlesticks. The body of the first candlestick is immediately followed by another larger one in the opposite direction.

There are bullish engulfing patterns and bearish engulfing patterns and they are composed of two candlesticks – one bullish and one bearish. 

Bullish Engulfing Candles

What is a Bullish Engulfing Candle?

A bullish engulfing candle is a dual candlestick pattern, which might signal a price reversal and an upcoming uptrend (bullish trend). This bullish pattern applies after there’s been a period of consolidation or downtrend.

Characteristics of a Bullish Engulfing Candle

The two-candlestick pattern is a bearish candle followed by a larger bullish candle. The reason this is an indicator of an uptrend is that bulls are showing more strength than bears. The change in strength with the bulls shows a reversal of momentum that is likely to continue into the future.

The name of the pattern comes from the idea that the bullish candle “engulfs” the bearish candle that came before it.

Chart Formation

Chart Formation on Forex Chart

Bearish Engulfing Candles

What is a Bearish Engulfing Candle?

A bearish engulfing candle is a dual candlestick pattern, which might signal trend reversal for an upcoming downtrend. The pattern applies after there’s been a period of consolidation or an uptrend.

Characteristics of a Bearish Engulfing Candle

The bearish engulfing pattern is similar to the bullish engulfing patterns but signals an upcoming downtrend instead.

The difference between bearish and bullish engulfing patterns is that a larger bearish confirmation candle follows a smaller bullish candle instead. The reason for this reversal is that bears have started to out strengthen the bulls and the momentum might continue into the future. 

This pattern happens in the uptrend and indicates the seller overpowered the buyer and the prices will now turn down.

Chart Formation

Chart Formation on Forex Chart

What Are Tweezer Patterns?

Tweezer patterns are two candlestick reversal patterns formed by two candles that have matching highs or lows.

This type of candlestick pattern is usually spotted after an extended uptrend or downtrend, indicating that a reversal from the previous trend will happen soon.

There are two types of Tweezer patterns: the Tweezer Bottom and the Tweezer Top.

Tweezer Bottom Candles

What is a Tweezer Bottom Candle?

A Tweezer Bottom candlestick pattern is a bullish reversal pattern that can be spotted at the bottom of a downtrend. It consists of two candles with very similar lows, while the second candle reflects more bullish market sentiment as the prices burst higher, in the opposite trend.

Characteristics of a Tweezer Bottom Candle

A tweezer bottom follows an extended downtrend and signals a reversal upwards. The first candlestick for a tweezer bottom has a bearish candle with a moderate-length shadow below. The second candlestick is a bullish candlestick with an equal length body and shadow sharing the same low as the first candle.

It indicates that there is strong support and the price is likely to head higher towards a bullish trend.

Chart Formation

Notice how the candlestick formation looks just like a pair of tweezers!

Amazing!

Chart Formation on Forex Chart

Tweezer Top Candles

What is a Tweezer Top Candle?

A Tweezer Bottom candlestick pattern is a bearish reversal pattern that can be spotted at the top of an uptrend. The first candle is bullish but shows rejection of higher prices, and the second candle attempts to surge higher but fails. It signals that the resistance strong and the market will decline and consolidate.

Characteristics of a Tweezer Top Candle

A tweezer top is the opposite of a tweezer bottom as it follows an extended uptrend and signals a reversal downwards. The tweezer top pattern has a bullish first candle with a shadow on top, and a bearish candle with a shadow on top following it. Similar to the tweezer bottom, the bodies and shadows must share the same high, low, open and close.

It indicates that there is strong resistance and the price is likely to go lower.

Chart Formation

Chart Formation on Forex Chart

As always, feel free to download the cheat pic below to help you along the way!

Next up, let’s take a look at Candlestick patterns with more than two candlesticks, or in other words Triple Candlestick Patterns.

Ready when you are!