Skip to main content

Candlestick Pattern : Spinning Top

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.

 

spinning top

Spinning top

The main features used to identify this candlestick are:

  • The candles have a real small body.
  • The upper and lower shadow are long.

candlestick

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. 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.

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 next day, and this is what happens. 

 

spinning top example

 

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 for the trade as per the expected movement in the market.

2 thoughts to “Candlestick Pattern : Spinning Top”

  1. Sir, if u notice in the chart used of bharti airtel, exactly where the arrow marking the uptrend ends, there is another spinning top (green) but still there is no reversal of trend after that..kindly clarify.
    Thanks.

    1. It is important to note that just a single candlestick pattern is not a reliable signal to predict the future moves. Therefore, you will need to use other indicators along with candlestick patterns to improve your accuracy. This chart has been shown just for simplicity in understanding. You can read about other indicators on the website.

Leave a Reply

Your email address will not be published. Required fields are marked *