Spinning Top Candlestick Pattern: What is it?

You can see that doji candles have a shorter wick and no, or almost no body. On the other hand, spinning tops have longer wicks that extend to both sides, while the body is also longer, although the distance between the open and close should be small. As with almost all candlestick patterns, the role of the next candle is important.

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  • The best way to use tops is as an early warning signal the current move could be coming to an end, and price may soon reverse or retrace slightly.
  • The small real body indicates the market closed very near to open.
  • On the other hand, with bearish tweezers, both candles have the same top.

You don’t know which way, though the expectation is obviously bearish given the recent drop, so you wait for more price action. 2 hours later, 3 consecutive big bearish pin bars form, telling you the bears have probably won the battle and that price could be about to fall, which it then does. We know a spinning top at a technical point reveals sellers think the price is too low/high – a good indication price is probably going to reverse. We can then use it to #1 know price still has a chance of reversing from the zone, and #2 as a timing mechanism on when to expect a price action entry signal to appear.

Spinning Top Candlestick Patterns (Strategies & Examples)

The spinning top illustrates a scenario where neither the seller nor the buyer has gained. A spinning top tells traders that there is uncertainty in the market, because there wasn’t much of a change between the opening and closing price. This can either mean that more neutral movements are ahead, or a price reversal is about to occur. An easy way to learn everything about stocks, investments, and trading. An end to a strong impulsive move upside has actually started with a spinning top pattern.

However, each trading method comes with varied risk descriptions. Therefore, the trader must indicate the name of the asset they are willing to trade in the search bar. After confirming the instaforex review upcoming reversal, the trader may proceed and select either the buy or sell option in the trading ticket. A spinning top can signify a future price reversal if confirmed by the next candle.

Conversely, if it occurs at the top of an uptrend, it could signal bearish reversal. These formations are multiple candlestick chart patterns with a gap. In a bullish tweezers pattern, a red and a green candle closes at the bottom of a trend that has the same bottom.

spinning top candlestick

Let’s understand more about this chart pattern through this in-depth guide. However, traders should not act on any candlestick pattern without considering other forms of technical analysis. Always consider other patterns and indicators, confirm the signal, and make sure not to stray from your trading plan and risk management strategy. In the above chart, we can see the jp morgan fx trading pattern pops up at the top of the uptrend. This indicates the indecision between buyer & sellers which leads to reversal.

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An inverted hammer indicates that bulls committed to fighting after bears long dominant. So, they may try and win the battle that may result from falling into the rising direction. An inverted hammer also forms at the bottom, however, it has a long upper shadow and a small body at the bottom. Spinning top and high wave candles both are a part of the candlestick pattern. While the spinning top has equal shadows, high wave candles often have one or two lengthy shadows.

spinning top candlestick

The action you just performed triggered the security solution. There are several actions that could trigger this block including submitting a certain word or phrase, a SQL command or malformed data. The information on this website is prepared without considering your objectives, financial situation or needs. Consequently, you should top freelance websites for developers consider the information in light of your objectives, financial situation and needs. In other words, the market has explored upward and downward options but then settles at more or less the same opening price – resulting in no meaningful change. Harness the market intelligence you need to build your trading strategies.

The price movement within the Spinning Top candle represents buyers and sellers rescinding each other resulting in a similar open and close price level. The advantage of incorporating the Spinning Top candlestick pattern within a trading strategy is that it is easy to identify with minimal implied time investment. This article does not provide examples of reversal candlestick patterns. While both the hanging man and the shooting star are reversal candlestick patterns, the latter is more powerful. It is relatively easy to spot spinning top patterns when looking at a candlestick chart, as they usually come at the end of prevailing uptrends or downtrends. Any small-body candles after a succession of long-body candles should alert you to the formation of a spinning top pattern.

How to Trade Spinning Top Candlestick Patterns?

As per encyclopedia of candlestick charts the frequency of appearance is Very high, they appear in all time frames all the time. Spinning tops are ants at a picnic, having the highest frequency rank of any candle. The candles are everywhere, and they don’t mean much when they do appear.

Trading with the Spinning Top candle involves understanding how it is formed and where it sits in relation to the overall market trend. The example below goes through identification, confirmation and execution of a practical forex trade using the Spinning Top. The counterattack candlesticks at the bottom are bullish and at the top a bearish reversal pattern. Engulfing patterns are among the most reliable reversal candlestick formations. The spinning top pattern appears at the top or the bottom of an asset’s movement, which indicates a probable trend reversal. As it may indicate a reversal signal, it may be less reliable during consolidation or sideways movement.

Spinning top candlestick: a trader’s guide

It forms from the bulls and bears battling for price supremacy but coming to a stalemate, and typically signals indecision in the market – which isn’t always true, as you’ll see later. The long wicks or shadows of spinning top mean that both bulls and bears tried to push the market in either direction but did not succeed. The small real body of spinning top means that price eventually closed very close to the open price and there was no clear winner on that day or timeframe. Spinning top candlesticks are pretty common so it works best when you use technical analysis basics to trade it.

Statistics to prove if the Spinning Top pattern really works

On the 28th of December 2021, a doji appeared after four green sessions, creating doubt about the bulls’ momentum. The spinning top isn’t a reversal signal; it just shows a pause in the market. If they lose the battle, price will move sharply because there’s no-one left to stop it anymore.

In the end, it’s not a big deal if you can’t tell the difference. A great way to double-check the spinning top candlestick strategy is by using the resistance line and support line strategy. When a spinning top candlestick is formed at the support level, it is likely to lead to a reversal of the market trend. The spinning top candlestick pattern can be a sign of a potential trend reversal and can be used as a strategy for guessing the probability of a price reversal. It could also act as a signal for more sideways movement and may mean that more neutral movement is about to occur.

How to Identify a Spinning Top Candlestick Pattern

It has a thicker real body and could also be found in consolidation areas. Look for price break above or below candle to confirm direction. Watch our video on how to identify and trade spinning top candlesticks. To use the spinning top candlestick trading strategy, you first need to identify the current market trend, which could either be bullish or bearish. If a spinning top candlestick is formed at the peak of a bullish trend, this is a good sign that bears may gain momentum, which also means it can likely be a sell signal.

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