For example, there might be certain days, months, hours or weeks, that time after time show bearish or bullish tendencies. You can practise trading using the spinning top chart pattern with an IG demo account. You’ll be able to open and close positions in a risk-free environment with £10,000 in virtual funds.

But we also like to teach you what’s beneath the Foundation of the stock market. Each day we have several live streamers showing you the ropes, and talking the community though the action. Our chat rooms will provide you with an opportunity to learn how to trade stocks, options, and futures. You’ll see how other members are doing it, share charts, share ideas and gain knowledge. Trading contains substantial risk and is not for every investor.

However, by the time the candles closed, their closing prices were located near their opening prices. Dojis are smaller, with smaller upper and lower shadows as well as smaller true bodies. Both patterns are common and can be used to signal a reversal following a significant price move. Instead of the spinning top or doji itself, a big move that occurs following it provides additional information about the next probable price direction.

Top 5 Momentum Indicators that Analyses Trend Strength

Two things may happen from here , the spinning top might just be a small breather by bears as they gather the steam again and push the markets lower and lower. This happens more often that the other possibility which is bulls actually taking control and pushing prices higher. The psychology behind the pattern is what occurs on any given day. The small real body is the main configuration of the spinning top candle.

In the world of supply and demand trading, proximal and distal lines are two terms… Ever glanced at a chart and spotted a curious candle with a long, thin line… With this top, we know lots of buyers still believe price is too low. We don’t know yet whether price is going to reverse from this zone.

You have to wait for the next candle to show a pin bar or engulf to know who’s now in control of price. Each top represented a significant battle between the bulls and bears; bears wanted price to keep falling, bulls wanted higher prices. Once they did, no buyers were left to stop price falling, resulting in a sharp decline before a new battle commenced at a lower price.

How to Trade Spinning Top Candlestick Patterns?

In this article, we’re going to take a closer look at the spinning top candlestick pattern. We will cover its meaning, definition and ways you can improve the pattern. In addition to that, we’ll also share a couple of example trading strategies. Most traders use indicators to confirm the signal of a spinning top and gather more facts on the price trends.

So, overall, it indicates that nobody actually won at the marketplace and that’s why spinning top candlestick pattern means indecision. The spinning top candlestick trading strategy is a great way to predict the future direction of a crypto market. When combined with other forms of technical analysis, it presents crypto traders with a great opportunity to make more accurate investment decisions. Over time, individual candlesticks form patterns that traders can use to recognise major support and resistance levels.

Want to know which markets just printed a Spinning Top pattern?

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. Let’s assume you’re following Aston Martin’s share price, which opens the trading day at 442p. As sellers enter the market, the share price starts moving, hitting a low of 430p. Buyers start to push back, and the share price reaches a high of 455p before the market settles and the share price closes at 445p. This creates a bullish spinning top candlestick, as pictured below.

Both patterns frequently occur and can be used to warn of a reversal after a strong price move. Thus this can be considered as an attempt by the bears to take the stock prices lower, but they were not successful in doing so. https://g-markets.net/ Thus this can be considered as an attempt by the bulls for taking the markets higher, but they were not successful in doing so. As the open and close prices are near to each other, the colour of the candle does not matter.

Difference between a spinning top and Doji?

At the peak of an uptrend, a spinning top may indicate that bulls are losing control and the trend may be about to change. It does not provide the trader with a trading signal with a specific entry or exit point, unlike the marubozu. Three-method formation patterns are used to predict the continuation of a current trend, be it bearish or bullish. Traders interpret this pattern as the start of a bearish downtrend, as the sellers have overtaken the buyers during three successive trading days. So again, DO NOT use spinning tops as reversal signals, they don’t work. The candle doesn’t reveal who won the battle, only that it took place!

So, think about the spinning top as “The calm before the storm”. 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. Here is another chart which spinning top candlestick shows the continuation of a downtrend after the occurrence of spinning tops. Here is a chart, which shows the downtrend followed by a set of spinning tops. Yes, we work hard every day to teach day trading, swing trading, options futures, scalping, and all that fun trading stuff.

What Does a Spinning Top Candlestick Tell You?

That said, depending on when and where they form, they can give you some really important clues on what’s going on behind the scenes with the bulls and the bears. Eventually, the battle comes to a stalemate with neither side able to get the edge on the other. At this point, the candle will close, and a spinning top will appear. Another simple yet effective filter could be to demand that the close is the highest close five bars back for an overbought market, and the lowest close 5 bars back for an oversold market.

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• The spinning top pattern is more significant in a market with strong trends, which could either be an upward (bullish) or downward (bearish) trend.
• We know a spinning top at a technical point reveals sellers (or buyers in our case) think the price is too low/high – a good indication price is probably going to reverse.
• The tops tell you buyers or sellers are firstly interested in wanting price to reverse – why else would they start battling the other side?

This resulted in the closing price reverting back/very close to the opening price. A spinning top indicates exhaustion after a cycle of uptrends or downtrends price pattern. The gap between the opening price and closing price means that no progress was achieved during the timeframe of the candle. The long upper and lower wick displays a higher level of volatility that occurred during the trading period, with neither bulls nor bears dominating. The idea behind indecision manifested in the market throughout the formation of the spinning top is that buyers and sellers move prices higher and lower during the trading process. It causes the closing price to reverse back closer to the opening price, and the bull trader forces it back to the top before the market closes.

Trading the Evening Star candlestick pattern

The trader can use this information to position himself in the market. That being said, it is not always that easy to identify the spinning top patterns that are most likely going to lead to a trend reversal, especially when you are trading in real time. The Spinning Top candlestick pattern is a versatile single candle pattern. It is versatile and mysterious because of its formation that can occur at the peak of an uptrend, in the very middle of a trend, or at the bottom of a downtrend. As such, you need to use this candle pattern as another confluence trading tool to predict a trend reversal and combine it with other technical indicators in order to confirm the reversal.