Spinning Top Candlestick: What Is It & How To Trade?
However, since the market has gone down for an extended period of time, buying pressure starts to increase, in the hope that a market reversal is imminent. Trading Forex, Futures, Options, CFD, Binary Options, and other financial instruments carry a high risk of loss and are not suitable for all investors. 60-90% of retail investor accounts lose money when trading CFDs with the providers presented on this site. The information and videos are not spinning top candle investment recommendations and serve to clarify the market mechanisms. Our approach emphasizes high risk-to-reward trades and sharp execution in forex and other markets, helping you build confidence in reading price action and making informed decisions. There is technically no direct opposite to the spinning top, as it’s a neutral candle.
The candlestick pattern reflects market uncertainty, where neither buyers nor sellers hold a clear advantage. However, its interpretation can be influenced by the prevailing market trend. When a bullish spinning top forms after a pronounced downtrend, it can be perceived as a potential indicator of an upward shift. Candlestick patterns have become popular analysis tools for many traders who wish to find an edge in the markets.
Monitoring overall market sentiment can also help you make more informed decisions. Once we get more information, we can combine bullish or bearish candlestick patterns with technical indicators and trade with more confidence. A double spinning top consists of two consecutive spinning top candlesticks, representing extended indecision, where neither buyers nor sellers have taken full control for two sessions. However, it’s a powerful signal of a potential turning point in price.
Let’s use a hypothetical example – a stock in a long-term downtrend prints a bearish spinning top. Although it isn’t a bullish candle, it does indicate that the bears have run into a bit of trouble – and if subsequent candles confirm it, this can be the start of a reversal. This scenario, translated into a candlestick pattern, gives you the spinning top. Likewise, a stock that opens at one price, sees a massive increase followed by a crash, but closes near to the opening price would likewise be a spinning top. So long as the market has explored both directions significantly, but the opening and closing prices are close, we have a spinning top on our hands. That might sound extremely unappealing, but indecision can be a significant piece of information.
In the crypto market, it signifies a proximity between the traded cryptocurrency opening and closing prices. The long shadows of the candle represent the high and low prices of the trading. These wicks indicate that both bears and bulls are very active, none of them taking the lead on the market. A spinning top candle is a candlestick with a small real body positioned in the middle of two long shadows. Yes, spinning tops can be incorporated into algorithmic trading strategies.
The small real body shows that buying and selling pressure has evened out by the end of a period. A Spinning Top often indicates that the prevailing trend is losing momentum and the market is pausing to determine its further direction. The Spinning Top candlestick pattern is powerful when used correctly — not in isolation, but as part of a confluence-based strategy.
