Remember that a strong move after the Doji or the forex candlestick patterns spinning top shows a new potential price direction. Dojis are smaller, with small real bodies and small upper and lower shadows. Both patterns occur frequently and are sometimes used to warn of a reversal after a strong price move.
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 black spinning top candlestick pattern occurs once the downward price trend. The breakout happens once the price closes below or above the top bottom of the candlestick. There are some situations where spinning tops could signal a notable trend change.
What Is a Spinning Top Candlestick?
The bulls lose control, and the trend reversal happens as a result of the spinning top occurring at the top of an uptrend. In this example, we see indecision, which signals more sideways movement. It’s especially in case the spinning top happens in a chronic range. In addition to that, this could also be an indicator of a probable price reversal if the price declines or advances.
- It can also signal a possible price reversal if it occurs following a price advance or decline.
- When the spinning top candlestick pattern occurs at the bottom of a downward trend, this could indicate that the bearish side of the market is losing the upper hand and the bullish side is about to gain control.
- That’s a potential situation in which the candle that accompanies confirms.
Have a look at the chart below, where the dojis appears in a downtrend indicating indecision in the market before the next big move. On the other hand, the candlestick double-spinning top pattern refers to a continuation of the previous trend. Once it is observed gapped above the past hollow candle, it shows a reversal in buying momentum. On the other hand, in case a Doji appears beneath a filled candle, it shows a downward trend reversal.
3 – Spinning tops in an uptrend
You can utilize derivatives like CFDs or spread bets if they want to trade when they spot the spinning top candlestick pattern. Spinning Top Candlestick refers to a specific candlestick pattern representing indecision about the assets’ direction in the days to come. In other words, it represents a situation in which both sellers and buyers are able to gain the upper hand.
Indicators or other forms of analysis, such as identifying support and resistance, may aid in making decisions based on candlestick patterns. A spinning top is a candlestick pattern that has a short real body that’s vertically centered between long upper and lower shadows. The candlestick pattern represents indecision about the future direction of the asset. These recurring candlestick patterns often help technical traders to forecast the short-term price direction of a market, depending on the type of candlestick identified and where it forms on a chart. The spinning top pattern is more significant in a market with strong trends, which could either be an upward (bullish) or downward (bearish) trend.
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When the spinning top candlestick pattern occurs at the bottom of a downward trend, this could indicate that the bearish side of the market is losing the upper hand and the bullish side is about to gain control. The spinning top candlestick pattern is a candlestick pattern that has a short body that sits between significantly long upper and lower wicks of relatively equal length. This candlestick pattern indicates indecision about an asset’s future trend direction. Suppose you were wondering what the difference and similarities between the Doji and spinning top candlestick patterns are. In that case, it’s crucial to understand that both dojis and spinning tops represent indecision. They have small lower and upper shadows and small real bodies in general.
Active traders should not trade instantly after the formation of a spinning top but rather wait for the confirmation from technical indicators after the formation of the next candle. It will help eliminate uncertainties in the market since the signal trend reversal will have been established. The spinning top candlestick pattern appears regularly across trading charts and is usually very easy to spot – making it a popular tool among technical traders. As with most candlestick patterns, technical traders will often use additional confirmation methods to help them identify the patterns that may lead to the best trading opportunities. Our final two chart images show the same spinning top forex patterns that appeared during a bullish trend.
How to Trade the Spinning Top Forex Pattern
But depending on the formation of the pattern this can be too restrictive or mean taking on too much risk. Trading around a spinning top can also pose some problems since the candle can be quite large from high to low. If confirmation comes after a spinning top and a trade is taken, placing a stop loss above or below the high/low of the spinning top could result in a large risk which doesn’t justify the potential reward.