Candlestick Pattern: Spinning Top
Spinning top as you all know is a toy that with a quick twist can be set to turn, the one that Leonardo set to spin in the movie Inception. The spinning top is a fascinating candlestick. Contrary to the Marubuzo, it does not give the trader any signal with particular entry or an exit point.
The spinning top is used to get vital information concerning the present scenario in the market.
These candlesticks add armour to any trading strategy, as they give the behind the scenes, the psychological scenario of buyers and sellers in the market.
After reading this post, you will be able to spot the spinning top, interpret it and trade it.
Identifying Spinning top candlestick
The main features used to identify this candlestick are:
- The candles have a really small body.
- The upper and lower shadow is long.
It conveys indecision as both buyers and sellers were not able to influence the markets. Both the bullish and bearish candlesticks for this pattern have the same meaning, that is a reversal of trend.
Spinning Top Interpretation
The interpretation of this candle is as follows:
- In a downtrend over the past few sessions, the sellers are in absolute control as they manage to bring the prices lower. With the spinning top in the downtrend, the sellers are satisfied with their rounds of selling, and the buyers are ready to take the price up.
- In an uptrend over the past few sessions, the interpretation is just the reverse of the above.
- If you find it neither in an uptrend nor a downtrend, then it does not mean much.
Spinning Top Example
Now let us see an example that will explain the concept for you.In the chart below (Bharti Airtel Daily Chart), you can see a clear downtrend preceding the Spinning Top. Hence you expect a reversal of the trend from the next day, and this is what happens.
Conclusion: Candlestick Pattern: Spinning Top
So the next time you see a spinning top individually or in a cluster, remember there is indecision prevailing in the market. The market could swing either way depending on the previous trend. You need to be ready for the trade as per the expected movement in the market.