How Can You Use a Spinning Top Candlestick Pattern in Trading? Market Pulse

Unlike some other candlestick types, their name does not have a Japanese meaning. Spinning tops at support and resistance levels, supply and demand zones, or fib retracements have a much higher probability of indicating a reversal. Use them as a warning signal price is about to reverse away from the level/zone, then watch for confirmation using pin bars or engulfing candles. 1 hour after the spinning top appears, a large bearish pin bar – which we know is a good reversal signal – forms, adding more confirmation price is about to reverse.

A bullish spinning top appears after a downtrend and hints that buying interest is returning. If the next candle moves upward, it can confirm the shift in sentiment. The meaning becomes clearer when the candle that follows confirms the direction. Without that confirmation, it remains a sign of uncertainty rather than a definitive signal.

Trading with the Spinning Top Candlestick Pattern

Traders view spinning tops as signals to reassess their positions and prepare for possible changes in trend direction. These conditions collectively create an environment where the spinning top can emerge, signaling a potential shift in market dynamics. We have a basic stock trading course, swing trading course, 2 day trading courses, 2 options courses, 2 candlesticks courses, and broker courses to help you get started. The importance of controlling your emotions and having a proper mindset when trading. Rising wedge patterns are bigger overall patterns that form a big bullish move to the upside. Usually, they signify consolidation areas before the trend reverses in the opposite direction.

In this example, we can see that there is no clear trend, and the price is bouncing back and forth within a set range. In this case, the spinning top does not serve any meaningful use, as market sentiment is already unclear and moving in a sideways manner. A spinning top candle marks a point of indecision about the asset’s future. It reveals that neither buyers nor sellers have active control over the price, and both are fighting to gain the position of power.

While the color (bullish or bearish) can provide context, the primary focus should be on the pattern’s position within the trend and the confirmation from subsequent market movements. Additionally, the presence of a spinning top can reflect changing market sentiment due to external factors such as economic news, earnings reports, or geopolitical events. When seen on a chart, it suggests that the balance of power is temporarily neutral, and the market is taking a pause as traders reassess their positions. This is particularly meaningful after a long trend, as it may indicate that momentum is weakening and the enthusiasm driving the previous price movement is fading.

This pattern suggests market indecision and is often found at the end of uptrends or downtrends, potentially signaling a reversal. 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. It forms from the bulls and bears battling for price supremacy but coming to a stalemate, and typically signals indecision in the market – which isn’t always true, as you’ll see later.

Watch how the same pattern behaves differently in trending versus ranging markets. The goal isn’t to memorize shapes — it’s to understand their meaning in context. Indecision patterns warn traders that neither side is firmly in control. Continuation patterns help traders recognize when a trend is consolidating rather than reversing — valuable insight for managing open positions.

Comparison of Their Appearances and Formations

• It means that the trader does not need to own the underlying assets but can speculate on their price pattern.
• Patterns such as bull flags, bear flags, ascending triangles, and descending triangles.
• Market news and economic events can significantly influence the formation of spinning tops.
• Engulfing, hammer, and morning/evening star patterns tend to be reliable, especially with volume and trend confirmation.
• I’ll be the first to admit that spinning tops aren’t the most useful of candlesticks.

Traders pay close attention to this pattern as it provides insights into potential market direction changes, allowing them to make more informed trading decisions. Spinning top candlesticks can form at the top or bottom of a pattern, signaling the end of a trend. If a spinning top candlestick forms at the end of a head and shoulders pattern, look out for a bearish reversal coming.

The Bearish Engulfing is its opposite twin of the bullish version. A large red candle completely engulfs the previous green candle, showing an aggressive takeover by sellers. It forms after a rally, with a small body near the bottom and a long upper wick — a visual sign that buyers tried to push higher but failed, leaving trapped longs above. 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.

Explanation of the Small Real Body and Long Upper and Lower Shadows

In contrast, a spinning top has both upper and lower shadows and a larger body. A hammer candlestick typically signals a bullish reversal, while a spinning top suggests indecision rather than a clear directional bias. A red spinning top represents a bearish candlestick pattern characterized by an opening price that exceeds the closing price. Nevertheless, it’s essential to emphasize that regardless of color, the disparity between the opening and closing prices is usually insignificant in a spinning top. Developing your ability to read modern footprint charts can greatly improve your candlestick pattern trading, even if you consider those patterns to be outdated.

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Once the price created a falling wedge pattern, the trend reversed and entered a rising wedge pattern. Many times, charts will consist of both rising and falling wedges. It’s important to find these patterns by drawing your trendlines.

Tweezer candlestick pattern in ThinkorSwim

Having a detailed knowledge of candlesticks and what they signal is one of the key requirements for successful trading. Even if the trend reversal doesn’t pan out, this sign of indecisiveness can also serve as an early-warning system that a position should be closed – if you have existing positions, act accordingly. Alternatively, if a spinning top occurs during a period of sideways trading, it’s simply a sign of more indecision – and a hint that one should move on to greener pastures.

• These differences influence how traders interpret the signals and incorporate them into their trading strategies.
• If you ignore the context and confirmation, however, it will just be another random candle on the chart.
• Implementing these takeaways can transform your trading approach, leveraging the spinning top candlestick pattern to achieve greater market success.
• Even though it does not provide exact price targets or guarantee a reversal, it helps traders identify moments when the market’s balance between buyers and sellers is delicate.
• If the closing price is lower than the opening price, then the spinning top candle is bearish.
• Wait to see what price does on the next few candles to find out who won the battle.

In an uptrend, the bulls have total control as they keep rising the prices. In a downtrend, the bears have total control as they keep making the prices fall. If the bears were successful, then the real body would have become a long red candle. If the bulls were successful, then the real body would have become a long green candle. If it is a red candle, then the low and closing prices are connected, and if it is a green candle, then the low and opening prices are connected.

Understand the limitations of the spinning top spinning top candlestick candlestick pattern to avoid pitfalls. Understand the formation and implications of the spinning top candlestick pattern. Shooting Star patterns are interpreted as a bearish reversal pattern. The bulls are losing control when spinning top candlesticks occur at the top of a bullish trend. The spinning top candlesticks are indecision candles because the upper and lower wicks did not affect meaningful price changes.

Look for a price break above or below the candle to confirm direction. The spinning top candlestick pattern serves as a vital technical analysis indicator of a potential reversal or pause in the prevailing trend. However, we should reiterate that relying solely on this candlestick pattern often leads to poor trading decisions. Based on our experience, it’s most effective with confirmation from other technical indicators and when considered within the broader market context. Thankfully, traders can explore alternatives like the harami, which are structured more meaningfully. Spinning top candlestick patterns are indicative of market uncertainty regarding future price movements.

After many years in the financial markets, he now prefers to share his knowledge with future traders and explain this excellent business to them. A doji has an extremely tiny (or nonexistent) real body, while a spinning top has a small but visible one. It reflects a session where buyers and sellers both pushed price aggressively, but neither side managed to win.

The bulls sent the price high, and the bears sent the price low. Although the price still closed near where it opened that day. The bearish spinning top indicates that, although buyers initially held control, sellers countered strongly within the same session. This indicates a potential bearish reversal, which is validated when the subsequent candle has a large red-coloured body. The bearish spinning top is a candlestick with a small red-coloured body and long equal or nearly equal wicks that appears after a bullish move.