This is consistent with The Predictive Power of Candlestick Patterns in Financial Markets report by the TARE, which suggests 53-54% success rates. The first notable aspect is the spinning top aligning with an upper Bollinger Band extreme. The same extreme occurred at two prior points near a key resistance, which would have been another strong hint.
What is a spinning top candlestick pattern?
To many, this may not sound that useful, but it can really help you out… Known as spinning top candlesticks, they signal indecision in the market. A candle you’ll find all over your charts, the Spinning Top is one of the most common candlesticks in forex.
Of course, there are other types of candlesticks that you should learn about. And even so, candlestick analysis alone is not enough to trade successfully. Not all candlesticks shapes earn names—so you should probably check out the ones that do. Just keep in mind that it’s not necessarily about memorizing all of the ins-and-outs of each. It’s more about ingraining the principles of price action into your brain. However, certain candle shapes may give you some trading ideas, especially given the right context.
Is a spinning top bullish or bearish?
Past performance of a Strategy Provider is not a reliable indicator of future results. It can be both bullish, bearish or signal a trend continuation. A spinning top has a small body and long shadows, showing market indecision, while a high wave candle reflects market volatility. Whether novice or experienced, mastering this pattern equips traders to navigate the financial markets with confidence and seize lucrative opportunities. As previously discussed, spinning tops are most effective when complemented with other patterns and indicators.
Is a Doji and spinning top candle the same thing?
In the context of a bullish market, this candle indicated a moment of indecision from buyers as they faced resistance at a previously established high. Sellers may have tried to slow the upward momentum, but their efforts were short-lived — the price did not pull back much and continued rallying on June 11. In this case, the pattern can be seen as confirmation of the resistance level’s strength.
Lastly, the Piercing Pattern occurs when a green candle opens below the prior day’s close but finishes above its midpoint — an early clue that buyers are reclaiming control. Next comes the Bullish Engulfing pattern — a small red candle followed by a large green candle that completely covers the previous one. This engulfing move demonstrates a powerful shift from fear to confidence. Candlestick patterns work because they visualize crowd behavior.
They can also provide more valuable information for more accurate predictions of price movements while the spinning top of uncertainty is present on the chart. With multi-timeframe analysis, dynamic alerts, backtesting, and customizable charting, you’ll gain a competitive edge in identifying trends and making informed trades across global markets. If you’ve ever watched a spinning top wobble just before it settles, you’ll get why these candles are such a fascinating read on the charts. In this section, we will dive into some real-world trading strategies that harness the subtle hints these little guys drop—think of them as the market’s way of whispering, not shouting. A spinning top candle captures one of those rare moments in the trading fray when neither buyers nor sellers are ready to call the shots. It’s like the market is taking a deep breath, briefly hitting the pause button before gearing up for whatever comes next.
In either case, when a spinning top or a doji appears during a trend, it is a sign of possible reversal. When it occurs during sideways trading, it is usually of little significance. However, as it occurred during a period of range trading, and there were no factors to support a breakthrough in either direction, it wasn’t a sign of anything big coming up. In that case, it would be wise to abandon short positions and also put contracts that you might have previously purchased. Sure enough, in short order we see a reversal and a sizable increase in price – as well as the makings of a new, longer-term uptrend.
The defining features of a spinning top are its long shadows above and below, with the opening and closing prices near the middle. These show that the market is in temporary balance, with neither buyers nor sellers taking control. Developing your ability to read modern footprint charts can greatly improve your candlestick pattern trading, even if you consider those patterns to be outdated. A spinning top candle is characterized by a small body and long wicks. The opening and closing prices are approximately in the middle of the candle. However, this does not mean that a spinning top white candle is a bullish pattern and a spinning top candle black one is bearish.
Spinning Top Candlestick Trading Strategy
For every long trade you make after a Spinning Top appears on a daily stock chart, on average, you should make 0.49% after holding for ten days. This result makes the Spinning Top the 10th best candlestick pattern to trade. The reward-to-risk ratio of 1.04 is the third lowest of the 25 candles we tested, so you should probably not use this candle in your trading strategies. We have observed significantly higher Reward/Risk ratios in our testing of “the most successful chart patterns.”
The goal isn’t to memorize shapes — it’s to understand their meaning in context. For example, after spotting a hammer, wait for the next candle to close above the hammer’s high. When a spinning top forms at a significant peak or trough, it often draws attention as a potential reversal signal. This appearance may reflect market uncertainty after a prolonged uptrend or downtrend. Copy trading involves risk, including following traders with different experience levels or financial goals.
This, in turn, can (and sometimes does) lead to a subsequent drop in price, or in other words, a reversal – the beginning of a downtrend. Today’s topic will be the spinning top candle – the #1 most common candlestick pattern. It is a sign of indecision – indicating that while there is action going on, neither the bears nor the bulls prevailed during a certain period. The bulls are losing control when spinning top candlesticks occur at the top of a bullish trend.
- Spinning tops can happen in uptrends, downtrends, and consolidation areas that form bull and bear flags.
- After many years in the financial markets, he now prefers to share his knowledge with future traders and explain this excellent business to them.
- However, the latter has a small body and upper and lower shadows of approximately equal lengths.
- A black spinning top is a bearish candlestick chart pattern that indicates that the open price of a security or other financial instrument was higher than the closing price.
- Spinning top candles can be used to manage risk more accurately.
- The opening and closing prices are approximately in the middle of the candle.
You can also activate the Free Trial at any time, giving you 14 days of full access to all the platform’s features. This trial allows you to explore the benefits of higher-tier plans and make a well-informed purchasing decision. According to Thomas Bulkowski’s rankings, the Black and White Spinning Top patterns are among the most common, occupying the top two spots. The appearance of a spinning top indicates that the market is in a state of uncertainty, reflecting an approximate balance of power between buyers and sellers. In this instance, the candle suggests that the buying momentum, which had been strong in the days prior, was weakening.
- Spinning top candles can be helpful though they often get a bad rap for being confusing.
- That might sound extremely unappealing, but indecision can be a significant piece of information.
- As a general rule, you want the RSI to be above 70 (overbought area) during uptrends and below 30 (oversold area) during downtrends.
- The spinning top candlestick is a clear visual signal of market hesitation.
A confirming candlestick would typically stay within the established sideways channel in a ranging market, reinforcing ongoing indecision. The timeframe plays a significant role in the reliability of the spinning top candlestick pattern. Higher timeframe spinning tops indicate more substantial market indecision and are more likely to precede significant trend reversals or consolidations. Yes, a spinning top candlestick pattern can indicate the potential for a price reversal in the financial markets. However, traders must exercise caution and not rely solely on the spinning top’s signal.
Then, watch out when the RSI starts to point up, as it can serve as a leading indicator of a possible change in market sentiment. Similar to example #1, we can see a clear uptrend leading to the spinning top candle. However, the spinning top candle was followed by a bullish candle that served as a continuation pattern—signifying that the bullish market sentiment remained intact. In this example, we can observe a clear uptrend before the spinning top candle occurred. A double spinning top is simply two spinning tops forming consecutively. This shows an even higher degree of uncertainty, as another indecisive candle forms instead of being followed by either a trend reversal confirmation candle or a trend continuation candle.
The Spinning Top candle is a single candlestick formation that often appears at the peak of an uptrend. It consists of a small variable body size, and the long upper and lower shadows should be approximately equal and extend at least twice as far as the body. 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.