Introduction to Spinning Top Candlestick
Spinning top is a candlestick pattern that takes the shape of a real body in the middle of equally long upper and lower wicks. It appears at the end of any uptrend or downtrend, signifying an indecision in the market.
Understanding Spinning Top Candlestick
Spinning top candlestick is formed when neither the buyers nor the sellers have an upperhand in the stock trend, signalling their indecision from both pushing the price of the stock in different directions—in such a manner that the open and the close prices are very close to each other, thereby forming a very small real body. This indecision in the futile efforts to move the price shows a continued sideward movement in the stock trend, particularly when there is already an established range. The spinning top may hint at a trend reversal, it’s only the following trend signal/s, as shown by the upcoming candlestick/s, will determine the change in trend or confirm a price reversal. On its own, it’s a very ambiguous signal to predict the price. Because of its vagueness, spinning tops work best while taking other signals and analytical tools into account. If there is a historical range before the spinning top occurred then identifying the support and resistance helps, while looking at the MACD or the RSI.
Highlights of Spinning Top Candlestick
Spinning top can be bearish or bullish, and can appear at the end of any trend. Dojis and spinning tops share similar appearances, and both point at trader indecision. However, dojis have smaller real bodies, smaller upper and lower wicks, whereas spinning tops have slightly bigger real bodies with really long upper and lower shadows. Although in some cases, dojis and spinning tops’ differences are mostly negligible and the two are oftentimes considered the same. Spinning tops, on their own, can be used to show the start of a sideward movement, though it is not guaranteed. The next trend signal may hint at the forward movement, though it takes time to truly determine the price movement.
