Spinning Top Candlestick Pattern What It Is, Examples, Trading

Also, it is safe to assume that most traders are tracking more than one stock/pair. Can you see why it is not a good idea to bet against the trend just based on a single candle? I argue that it takes more than a single candle to reverse a whole trend. This implies that a period of high volatility is likely to follow, and that is exactly what you and I need, as traders, right?

Improving a Spinning Top Trading Strategy

As a neutral pattern, the most evident disadvantage of a spinning top pattern is its inability to indicate where the price is likely headed when used alone. Yes, it clearly shows indecisiveness and uncertainty, but indecisiveness is not a direction; it’s just a state during a point in time. Hence, a spinning top is usually analyzed with the following candle in mind to determine whether the asset is more likely to continue its trend or make a trend reversal. In fact, relying on the spinning top as a standalone tool to determine future price direction is simply irresponsible, especially for beginners. In this case, a Spinning Top can indicate that the price is resting as it closes near where it opens (despite the wild price swings within the day that are reflected in the long wicks).

Does it Matter if a Spinning Top is Bullish or Bearish??

In this comprehensive guide, we’ll explore the Spinning Top Candlestick Pattern meaning, dissect its distinctive characteristics, and examine its formation. Additionally, we’ll address common misconceptions and provide advanced insights to enhance your trading prowess. Now, conventionally, it is said that the Spinning Top candlestick pattern is a trend reversal pattern… A red spinning top represents a bearish candlestick pattern characterized by an opening price that exceeds the closing price. Nevertheless, it’s essential to emphasize that regardless of color, the disparity between the opening and closing prices is usually insignificant in a spinning top. On Day 1, it opens at $70 and closes at $71, with highs at $73 and lows at $68, forming a spinning top.

How to Spot a Hammer Candlestick in Trading Charts

A doji has an extremely tiny (or nonexistent) real body, while a spinning top has a small but visible one. The pattern becomes more meaningful when it forms at key levels. At support, it can hint that selling pressure is fading; at resistance, it can show buyers are struggling to push higher. spinning top candle In a downtrend, a spinning top can indicate that sellers are losing momentum.

Candlestick Patterns: Interpreting the Spinning Top

Although it isn’t a bullish candle, it does indicate that the bears have run into a bit of trouble – and if subsequent candles confirm it, this can be the start of a reversal. 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. In most cases, this will cause the most risk-averse traders to exit their positions.

• A stop-loss – above the intraday bulge.The target – below the previous day’s spinning top candlestick, as the earlier indecisiveness seems to be giving way to seller dominance.
• The spinning top candle pattern needs to be combined with other methods of analysis, of course – but it is incredibly versatile.
• These distinctions help traders determine the likely direction of the next market move based on the context of the spinning top’s appearance.
• Using stop loss and take profit can protect you, but that is easier said then done when using spinning top candlesticks.

The most straightforward way to trade a spinning top is to go short if the signal shows an impending reversal of a bullish trend and go long if the signal shows a reversal of a bearish trend. Using stop loss and take profit can protect you, but that is easier said then done when using spinning top candlesticks. To execute trades based on the spinning top candlestick pattern, derivatives such as spread bets or CFDs offer viable options.

However, as we will demonstrate later, volume analysis indicators and footprint charts offer the most valuable insights when interpreting candlestick patterns. The spinning top pattern in technical analysis is a single Japanese candlestick pattern. Its key feature is the small candle body (the difference between the opening and closing prices) and long shadows. Master the hammer candlestick pattern—a key indicator for market reversals. You can easily automate candlestick pattern recognition using specialized software like TrendSpider, or TradingView.

• This formation shows us that sellers initially pushed prices lower, but buyers stepped in to push prices back up to a similar area.
• It suggests a state of equilibrium between supply and demand, with the price oscillating within a narrow range.
• I’ve used TrendSpider for 7 years for my research and testing.

How to Trade the Doji Candlestick

There were at least three peaks and valleys that made this downtrend especially effective. You’ll notice that the spinning tops formed near these important levels as well. This illustrated the tug of war between the bulls and bears, as they vied for control of price action. It may resemble long-legged doji candlesticks when reading stock charts. That is why avoiding getting bogged down in the minutiae is important.

Traders often weave spinning top candles into a broader strategy by pairing them with confirmation signals and careful risk management. For instance, catching a spinning top flickering near a trendline followed by a confirming candle can serve as a reliable entry point. The importance of spinning top candles tends to shift depending on the market mood. After sharp trends, they often give a little nudge toward possible reversals.

Learn the distinctive characteristics of spinning tops for better trading insights. Access TradingView’s charts, real-time data, and tools, all in one platform. It it quite interesting that a small little candle(st candle) is so frequently over looked, tested it on the 1, 5, 15min time, spotted about ten at a Glace, thank you Rayner In this strategy as well, we’re looking at things within the context of the prevailing trend and will take trades only in the direction of the trend.

Other services

Not compared to pin bars and engulfing candles, which give us a clear idea of what price will next. Even so, they can provide you with some really useful insights, which I hope you’ve gleaned from today’s post. Wait to see what price does on the next few candles to find out who won the battle.

What Does a Spinning Top Candlestick Mean?

In contrast, a long red candle is regarded as a bearish candlestick pattern as it shows that the price has continued to go down since it opened that day. When market interest is low, the asset can be easily pushed between two price extremes on that specific day. Hence, this gives the appearance of a short body and long wicks. This is why analyzing this pattern together with the volume indicator is vital to pinpoint valid spinning tops to watch out for. Some traders may look for spinning tops on minutes or hourly charts, but there isn’t a lot of important information gleaned.