spinning top candlestick pattern 9

Spinning Top Candlestick: How to Trade the Spinning Top Pattern

Spinning top candlestick is an essential indicator in technical analysis, signaling market indecision. They are characterized by small real bodies and long upper and lower shadows. Understanding the two main types, bullish and bearish spinning top patterns, is crucial for traders to make informed decisions.

Since candlestick patterns are representations of market action, they give us interesting insights into what the market has been up to. When the spinning top patterns occur after a prolonged uptrend or downtrend, it would suggest that the current trend is losing momentum and a reversal could be imminent. Spinning tops are a common candlestick pattern, which means they work in conjunction with other forms of technical analysis. In some cases, the confirmation would assist in clarifying what the spinning top is saying. When a trader believes that a spinning top after an uptrend could result in a reversal to the downside, the candle that comes after the spinning top needs to witness price drops. If that does not happen, the reversal is not confirmed, and the trader will need to wait for another trade signal.

• This flexibility allows them to trade in both rising and falling markets.
• Confirmation from subsequent price action or supporting technical indicators is essential before making trading decisions.
• Therefore, Fib helps pinpoint valid target price levels and subsequent trailing stops.
• It will help eliminate uncertainties in the market since the signal trend reversal will have been established.

Carefully check the body size and shadow symmetry before labeling the candle. If so, keep reading if you want to learn the best bullish spinning top trading strategy. In fact, more often than not, the dojis and spinning tops appear in a cluster indicating indecision in the market. The storm could be in the form of a continuation or a reversal of the trend. In which way, the price will eventually move is not certain; however, what is certain is the movement itself.

Understanding Three Black Crows Pattern in Candlestick Trading

As you can see in the picture, although they look similar at first glance, there are some key differences. While both have small bodies, Doji candles have almost equal opening and closing prices forming the tiny real body of the candle, as well as much shorter upper and lower shadows or wicks. This scenario, translated into a candlestick pattern, gives you the spinning top. Likewise, a stock that opens at one price, sees a massive increase followed by a crash, but closes near to the opening price would likewise be a spinning top. So long as the market has explored both directions significantly, but the opening and closing prices are close, we have a spinning top on our hands. Below, we are going to show you the two types of spinning top patterns combined with Fibonacci support and resistance levels – bullish and bearish spinning top patterns.

A Bearish spinning top is a single candlestick pattern that represents indecision about the future price movement. A Bearish spinning top candlestick pattern has a short real body with upper and lower shadows longer than the body. A small real body means that the open price and close price are close to each other. Perhaps one of the most critical insights the spinning top provides is the need spinning top candlestick pattern for caution and further validation before acting on its signal. While the pattern is useful for spotting changes in market behavior, it is not a definitive indicator on its own.

Upside Tasuki Gap Pattern: Learn How To Trade It

Having all options available to you allows you to trade in any direction the market may move in. A bearish crossover, which is also known as the death cross, is signalized when the defined short-term moving average crosses the long-term moving average from above. A Simple Moving Average (SMA) is the best among the other technical indicators in the bearish market due to its simplicity. Let’s say you have identified a spinning top (1) as a candlestick pattern on the daily chart. Knowing that the market may be experiencing indecision after a price increase, you switch to an hourly footprint the next day.

What Are The Pros And Cons Of The Spinning Top Pattern?

• This pattern holds more significance if it appears after a prolonged price trend, either upward or downward.
• Bear factors are futile to make the market move in a single direction, resulting in market indecision.
• High trading volume during the formation of a spinning top can add weight to the signal, suggesting that the indecision is significant and may lead to a notable market move.
• It has a really small body (the difference between the opening price and closing price), and very long upper and lower wicks (shadows).
• However, as we will demonstrate later, volume analysis indicators and footprint charts offer the most valuable insights when interpreting candlestick patterns.

Spinning top and Doji play critical roles in chart analysis but require careful interpretation. While a spinning top candlestick can hint at market direction through its body color, a Doji often serves as a more precise signal of market hesitance and potential directional change. Traders must use these patterns with other technical indicators to enhance accuracy and decision-making.

Traders are reminded to seek additional confirmation, such as follow-up candlestick formations or signals from technical indicators, before making decisions. This careful approach helps reduce the likelihood of false signals and improves the overall reliability of trading strategies built around the spinning top. By understanding these insights, traders can better interpret price action and make more informed choices in their trading plans. The spinning top candlestick pattern offers traders a deeper look into the underlying sentiment of the market during a given period.

✓  A black spinning top candlestick – a candle where the closing price is lower than the opening price. ✓  A white spinning top candlestick – a candle where the closing price is higher than the opening price. Additionally, the presence of a spinning top can reflect changing market sentiment due to external factors such as economic news, earnings reports, or geopolitical events. Another key takeaway from the spinning top is its ability to hint at potential trend shifts. When this pattern appears after a prolonged move upward or downward, it suggests that the driving force behind the trend could be fading.

Trading Futures and Options on Futures involves a substantial risk of loss and is not suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. Opinions, market data, and recommendations are subject to change at any time. There is technically no direct opposite to the spinning top, as it’s a neutral candle. So, a spinning top in a downtrend is a bearish spinning top, while one in an uptrend is a bullish spinning top. Here, one waits for the confirmation candle and then a retest, ideally within 50% of the spinning top’s range.