For instance, this can look like a major breakout from a prolonged sideways movement. When such a breakout occurs, it usually catapults the price, making substantially higher highs and higher lows in just a few trading sessions. Therefore, Fib helps pinpoint valid target price levels and subsequent trailing stops.

They may also appear in certain types of candlestick patterns. A spinning top typically starts with a powerful move in one direction, then reverses to break through the open price and beyond, to then reverse again and close back near the open. It will often take various shapes before finally closing as a spinning top candlestick.

• With both of these variations, context is king – always look at the subsequent candles and the prevailing price trend.
• The Spinning Top Candlestick Pattern is a powerful tool in the arsenal of any trader, offering valuable insights into market sentiment and potential trend shifts.
• It reflects a session where buyers and sellers both pushed price aggressively, but neither side managed to win.
• Traders pay close attention to this pattern as it provides insights into potential market direction changes, allowing them to make more informed trading decisions.

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The formation of a spinning top candlestick helps determine the probability of a price reversal especially if it happens after a price decline. Because of the small variation in the market trend, the candlestick is referred to as a continuation pattern. In September 2023, Apple Inc. (AAPL) was in a strong uptrend. A spinning top formed after the stock reached a new all-time high, with the candlestick showing a small real body and long shadows. Traders used this pattern in conjunction with moving averages and MACD indicators, which confirmed a potential reversal. Shortly after, AAPL experienced a pullback, validating the spinning top as a reliable reversal signal in this context.

The lower shadow connects the lowest price of the day with the real body. As the open and close prices are near to each other, the colour of the candle does not matter. For instance, if the open price is Rs. 320, and the closing price is Rs. 324, then this will lead to the creation of a small real body as a 4-point move is not much. A small real body indicates that the open price and close price are quite close to each other. The upper shadow connects the highest price of the day with the real body. Traders might find it challenging to assess the exact proportions of the candle’s shadows and body when identifying the pattern.

The small real body of the spinning top suggests that neither bulls nor bears have taken control, resulting in minimal net movement from open to close. Meanwhile, the long upper and lower shadows reflect significant volatility within the trading session. This duality showcases a tug-of-war scenario where prices fluctuate widely but end up closing close to the opening price, highlighting the struggle between buying and selling pressures. This chart illustrates the formation of multiple spinning tops during a downtrend.

Spinning Top Candlestick: Meaning, Examples & How to Use It

In the image above, you can see a spinning top chart pattern printed around the end of 2022. The chart follows the Nifty 50 Index, which consists of 50 of India’s largest companies. The candle has a small body, long wicks, and seeing as it is bearish, the opening price was higher than the closing price.

Don Candlestick Analysis Still Works in 2025?

By understanding these insights, traders can better interpret price action and make more informed choices in their trading plans. The spinning top candlestick pattern offers traders a valuable tool to improve their market analysis and trading decisions when used thoughtfully. Its ability to reflect shifts in market sentiment makes it particularly useful for anticipating changes and fine-tuning trade setups. Consider a stock or currency pair that has been trending upward for several days or weeks. During one session, a bearish spinning top forms, showing that while buyers continued to push the price higher and sellers pushed it lower, the session ultimately ended with a slight loss. This subtle shift can signal that the uptrend is weakening and that sellers are gaining confidence.

Suddenly, a day where buying and selling pressure were matched happens. That moment of indecision can be a sign of reversal – an upcoming change in a thus-far prevailing trend. With options experiencing high volume and liquidity, there’s money to be made in the market – and identifying a trend reversal is one of the most surefire ways to do just that. Understanding market sentiment is a tall order – there are countless factors at play, but there is a way to neatly summarize those factors, and they are called chart patterns.

The closing price is near the middle of the candle, but slightly below the opening price. The screenshot below shows two examples of the spinning top pattern on the daily chart of Apple (AAPL) stock. While there may be more of these patterns on the chart (the exact number is difficult to determine due to the subjectivity of analysis), we will focus on examining these two specific examples. Traders typically look for confirmation from subsequent price movements or other technical indicators to decide on a course of action. Antonio Di Giacomo studied at the Bessières School of Accounting in Paris, France, as well as at the Instituto Tecnológico Autónomo de México (ITAM). He has experience in technical analysis of financial markets, focusing on price action and fundamental analysis.

• Well, when a Spinning Top candlestick forms when the price is trying to breakout/breakdown, it tells us that there is still indecision and the break in price lacks conviction.
• Spinning top candles can be used to manage risk more accurately.
• Moreover, partnering with a trusted and regulated broker like Opofinance ensures that you have the necessary resources and support to implement these strategies effectively.
• Afterward, the spinning top candle is followed by a confirmation candle that signifies a shift in market sentiment from bullish to bearish—ultimately resulting in the downtrend that soon followed.

A simple way to tell them apart is by the body – to qualify as a doji candle, the body can represent up to 5% of the candle’s range – any more and it is a spinning top. Spinning top candles are often confused with doji candles, another common and intuitive chart pattern. Doji candles, however, are much rarer and come in a variety of types, all of which signal different things. However, the second circled pattern, a red or bearish spinning top, occurred at a particular juncture in the trading day.

What’s the difference between a doji and a spinning top?

You enter a short trade, aiming to ride the breakout momentum. Another effective way to use spinning tops is around key support and resistance zones, where they often signal that the market is struggling to break through a level. The confirmation you see afterwards, such as a solid breaking past of the high or low, is what you should act on. Trading a Spinning Top without confirmationIt’s a mistake to trade a Spinning Top on its own.

The dragonfly doji’s distinct difference in appearance is its little to no real body coupled with relatively long spinning top candlestick lower shadows or wicks. Similar to the hammer and bullish pin bars, dragonfly dojis are also bullish reversal patterns that appear in downtrends. In the case of the marubozu, the important aspect to look at is the color. A long green candle is considered a bullish candlestick pattern as it shows that the price has consistently increased since it opened that day. In contrast, a long red candle is regarded as a bearish candlestick pattern as it shows that the price has continued to go down since it opened that day. In contrast, a doji candlestick pattern usually has no real body and relatively much shorter wicks.

Wait For The Appearance Of The Spinning Top Candlestick Pattern

This rare yet important formation magnifies the message of market indecision, as it shows that for two sessions in a row, neither buyers nor sellers were able to gain the upper hand. The presence of back-to-back spinning tops reflects an extended period of uncertainty, where both sides are testing the market but neither can push the price convincingly in their favor. The formation of the spinning top candlestick is closely tied to the dynamics of market sentiment and intraday price movements.

Lack of Clear Direction on Its Own and the Need for a Confirmation

Even more importantly, you need to develop your own edge and learn risk management. And if you really want to take it all the way, look into options and trading automation. Tools like chart markup and trading indicators can reveal even more.

To be more precise, the position of the spinning top in relation to other candles – what comes before a spinning top and after it. In general, the longer the wicks, the more likely it is that a reversal is about to occur – no matter whether it is black/red/bearish or white/green/bullish. To read spinning top candles, it is important to analyze the wicks and the body. A long upper wick indicates selling pressure, while a long lower wick indicates buying pressure. It is important to look at the context in which the spinning top candle occurs to determine its significance. The spinning top candle pattern needs to be combined with other methods of analysis, of course – but it is incredibly versatile.