How to Trade with the Spinning Top Candlestick IG International

spinning top candlestick pattern

Confirmation of a short signal comes with a dark candle on the following day. Candlestick charts are a technical tool that packs data for multiple time frames into single price bars. This makes them more useful than traditional open, high, low, and close (OHLC) bars or simple lines that connect the dots of closing prices.

Doji and Spinning Top

Candlesticks build patterns that may predict price direction once completed. Proper color coding adds depth to this colorful technical tool, which dates back to 18th-century Japanese rice traders. In conclusion, the Spinning Top candle depicts market indecision between buyers and sellers which could indicate price reversals. It is important to recognise the positioning of the Spinning Top within the market – within a trend or at key price levels of support and resistance.

Plan your trading

spinning top candlestick pattern

Here, you can see price has just entered a demand zone – a good zone, in fact. That makes a reversal much more likely, meaning the top is a higher quality signal. With that in mind, we can use spinning tops as hints on whether a reversal/retracement is near. The wicks will also have some size variation in them – bigger wicks mean a bigger battle went on. Eventually, the battle comes to a stalemate with neither side able to get the edge on the other.

How to correctly trade the Spinning Top candlestick pattern

spinning top candlestick pattern

Spinning tops frequently occur when the price is already moving sideways or is about to start. Spinning tops within ranges typically help confirm the range and the market’s indecision. Spinning tops within trends may be reversals signals, but the candle that follows needs to confirm. Three-method formation patterns are used to predict the continuation of a current trend, be it bearish or bullish.

What is the spinning top candlestick chart pattern?

We will cover its meaning, definition and ways you can improve the pattern. In addition to that, we’ll also share a couple of example trading strategies. However, a trader needs to apply technical indicators and signals to analyze the trading movements. Such an analysis will protect the trader from straying away from the trading pattern and stick within the risk management plan. A spinning top occurring at the peak of an uptrend can signify that the bullish is losing track and the trend is about to reverse. However, when a spinning top is at the base of a downtrend, it is a sign that the bearish is losing control, and the bullish may take control.

Whoever wins will control price, but that will only show on the next candle, not the spinning top. And I wonder how many of those moves began after a spinning top appeared? During this down move on Usd/Jpy, three spinning tops formed, followed by a sharp decline. So we need to wait for more signs price could be about to reverse before entering a trade.

Wish success to your ways always sir.My preview refuse to work that’s why I’m using comment to share my experience. Stoploss would be above the high of the flag as marked and this was followed by a good move lower. I argue that it takes more than a single candle to reverse a whole trend.

That said, depending on when and where they form, they can give you some really important clues on what’s going on behind the scenes with the bulls and the bears. By now, I hope you realize how powerful the Spinning Top candlestick can be if it is used in the spinning top candlestick pattern right context. In this strategy as well, we’re looking at things within the context of the prevailing trend and will take trades only in the direction of the trend. Now, there is another interesting way in which we can use the Spinning Top candlesticks.

  1. Such an analysis will protect the trader from straying away from the trading pattern and stick within the risk management plan.
  2. Yes, candlestick analysis can be effective if you follow the rules and wait for confirmation, usually in the next day’s candle.
  3. The three black crows candlestick pattern comprises of three consecutive long red candles with short or non-existent wicks.
  4. The formation of the candlestick indicates a level of indecision among buyers and sellers, which depicts price reversals, hence creating a neutral pattern.
  5. These spinning tops can signal a reversal may soon begin, but DO NOT take them as entry signals.

Therefore, the trader must indicate the name of the asset they are willing to trade in the search bar. After confirming the upcoming reversal, the trader may proceed and select either the buy or sell option in the trading ticket. The third spinning top is exceptionally large compared to the candles around it. It confirms the current indecision of the market, as the price continues to head sideways. The piercing line is also a two-stick pattern, made up of a long red candle, followed by a long green candle.

The Spinning Top candlestick is a pattern, that has to be viewed in the context of the overall market conditions. As for forecasting reversals, the common nature of spinning tops also makes this problematic. Confirmation is required, but even with confirmation, there is no assurance the price will continue in the new direction. It indicates the reversal of an uptrend, and is particularly strong when the third candlestick erases the gains of the first candle. The lines above and below, known as shadows, tails, or wicks, represent the high and low price ranges within a specified time period. Candlesticks are graphical representations of price movements for a given period of time.

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