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What Is Spinning Top Candlestick Pattern? A Complete Overview

What Is Spinning Top Candlestick Pattern? A Complete Overview
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The spinning top candlestick pattern is a type of chart pattern that indicates a possible trend reversal in the market. It is considered to be the most mysterious candlestick pattern because of its formation, which can occur by either an uptrend or downtrend. Let’s understand more about this chart pattern through this in-depth guide. 

The first step to success in the financial market starts with keeping a sharp eye on past price movements, using historical information to predict future outcomes and focusing on candlestick formation. And when we talk about candlesticks, we can’t miss the spinning top candlestick pattern. 

In this trading tutorial for beginners, we will offer a detailed guide on the topic – What is Spinning Top Candlestick Pattern? The guide will further help you understand how to trade spinning top candlestick patterns.

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What Is Spinning Top Candlestick Pattern?

A Spinning top candlestick pattern is a symmetrical chart pattern that provides useful insights into the current market situation for a specific asset. The pattern indicates the uncertainty over the asset’s future direction, resulting in both buyer and seller getting no upper hand during the trade.  

The spinning top candlestick patterns form when a buyer pushes the asset’s price up while the seller pushes it down during the same time period. 

The pattern indicates a draw between both sides when the closing price end near the open. However, the spinning tops may indicate a possible price reversal if the candle confirms a strong price uptrend or downtrend. 

The Candlestick pattern works well for many financial instruments, including Forex, Stocks, Commodities and Cryptocurrencies. 

How Does Spinning Top Candlestick Pattern Look Like?

As many traders may find it difficult to read the spinning top candlestick pattern, it is really important to understand the pattern’s basics and components. 

Just like every candlestick pattern, Spinning tops also have three major components: The Body, the Upper Shadow and the Vertical Line. Let’s understand it with the help of a chart: 

How Does Spinning Top Candlestick Pattern Look Like?

Image Source: Pattern Wizard

As shown in the image, the real body is quite small, while the upper and the lower shadow are almost of the same length. Let’s understand these components more deeply: 

Solid Central Part or Real Body

The real body of the spinning top candlestick pattern shows the low difference between the assets’ opening and closing prices. 

Upper Shadow

The upper shadow indicates the bull’s effort to move the price upward. For every unsuccessful attempt, a new spinning top candlestick pattern forms. 

Lower Shadow

The presence of a lower shadow indicates the bear’s effort to move the price in a downward direction. Just like the upper shadow, the candlestick pattern appears for the unsuccessful attempt. 

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What Does Spinning Top Candlestick Pattern Indicate?

A spinning top candlestick pattern indicates strong indecision between the buyer and the seller, which results in both parties being unable to get uphand and ending up where they started. 

This indecision indicates more volatile movement, especially if the patterns form within a specific range. Sometimes, these patterns may indicate a strong trend change. 

A spinning top forming on the uptrend could signify bulls’ losing control, which may pressure trends to reverse. Similarly, a spinning top at the downtrend’s bottom indicates that bears are losing control while bulls are taking over.

In case a trader thinks a spinning top after an uptrend is a trend reversal, the pattern should show the price drop. If it fails, the trend reversal will be seen as incomplete, and traders will have to wait for another signal. 

Spinning Top Candlestick Examples

The spinning top candlestick pattern is quite simple to read and understand the price chart. Let’s take the help of a chart example to better understand the spinning top candlestick pattern

Spinning Top Candlestick Examples

Image Source: Pinterest

In the chart, we can see the spinning top candle pattern forms after the price drop. Here, you can see the bullish reversal signal near the previous pattern has ended. Therefore, this spinning top pattern is signalling an upward trend. 

What Is Bullish And Bearish Spinning Top Candlestick?

A spinning top candlestick pattern has two main variations: Bullish and Bearish. Both these trends offer different insights into the market. Let’s understand more about these trends. 

What Is Bullish And Bearish Spinning Top Candlestick?

Image Source: IG

Bullish Spinning Top Candlestick Pattern

The bullish spinning top candle is often indicated in green colour. The bullish patterns forms when the closing price of an asset surpasses its opening price. It indicates the upward market trend. 

Bearish Spinning Top Candlestick Pattern

Opposite to Bullish patterns, Bearish spinning top candlestick patterns are red in colour. The occurrence of bearish patterns indicates that the asset’s opening price is higher than its closing price. The bearish pattern shows the downward market trend. 

Spinning Top Candlestick Pattern: How To Identify?

As previously mentioned, a spinning top candle has a long real body between the lower and the upper wicks. If you’re unable to see this formation, be cautious, it may b some other candlestick formation. 

The spinning top pattern appears at the top or the bottom of an asset’s movement, which indicates a probable trend reversal. As it may indicate a reversal signal, it may be less reliable during consolidation or sideways movement.

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How Do You Trade With The Spinning Top Candlestick Pattern?

There are many ways to trade with the spinning top candlestick pattern. However, there are many factors to keep in mind before placing a trade based on these patterns. 

The first and most important step before trading is to confirm the patterns. You can use technical analysis and indicators to gain in-depth insight into price trends. 

For instance, you can use a stochastic oscillator indicator to test the signal’s speed and momentum over a specific period. If you believe a reversal is confirmed, you can start the trade. 

The best way to trade with the spinning top candlestick pattern is to use derivatives such as CFD trading. CFD allows you to profit from speculating on the asset’s price movement rather than taking ownership. It gives traders a chance to trade in both bullish and bearish spinning tops. 

Follow these steps to trade with the spinning top candlestick chart pattern:

  • Create a trading account with a reliable CFD broker like InvestFW
  • Search for the asset you want to trade in.
  • Enter your trade position size. Tap on  ‘buy’ or ‘sell’ in the deal ticket.
  • Confirm the trade order. 

What Is The Difference Between Doji And Spinning Top Candlestick Patterns?

Doji and spinning top candlestick patterns have a lot of similarities and differences. Both candlesticks indicate indecision in the market and potential price reversal of the prevailing trend.

Let’s figure out the main differences between Doji vs Spinning Top Candlestick Pattern:

Doji Candles Spinning Top Candlestick
Formation  These candles have small real bodies and small upper and lower shadows It also has small upper and lower shadows. 
Shape Cross Long
Trend Confirmation Required Required
Indication Indecision about the market Indecision about the market
Pattern Neutral Reversal

Conclusion

In conclusion, I would only say that the spinning top candlestick pattern can prove to be profitable if it occurs at a value area. Using it in conjunction with other technical indicators will also help you confirm price action. Overall, the spinning top candlestick pattern, if used wisely, can help identify the trend reversals; therefore, an essential tool for every trader.

The only suggestion I will give here is that traders should use these patterns on demo trades first, so they can rest assured about the probable profits and losses. So, open your demo trading account with investFW today. 

FAQs

What Does The Formation Of The Candlestick In The Chart Indicate?

A candlestick pattern indicates the open, low, high, and close prices of the day. It indicates the market movements, especially if the patterns form within a specific range. Sometimes, these patterns may indicate a strong trend change. 

Is Spinning Top Bearish Or Bullish?

Spinning top candlestick patterns can be both bearish and bullish. Both these trends offer different insights into the market. While the bullish spinning top candle is often indicated in green colour, the bearish trend is indicated in red colour. 

How Do You Use A Spinning Top Candlestick?

Traders use spinning top candlestick patterns to get insights into the current market situation for a specific asset. The pattern indicates the uncertainty over the asset’s future direction, resulting in both buyer and seller getting no upper hand during the trade. The spinning top candlestick patterns form when a buyer pushes the asset’s price up while the seller pushes it down during the same time period. 

What Is The Difference Between Spinning Top And High Wave Candle?

Spinning top and high wave candles both are a part of the candlestick pattern. While the spinning top has equal shadows, high wave candles often have one or two lengthy shadows. 

How Do You Make A Spinning Top?

The spinning top candlestick patterns form when a buyer pushes the asset’s price up while the seller pushes it down during the same time period. 

What Is White Spinning Top?

White spinning top refers to candlestick patterns that are small and have upper and lower shadows that exceed the length of the candle’s real body. They often indicate indecision between the buying and the selling parties. 

What Are The Top Candlestick Patterns?

The 5 top candlestick patterns include Doji, Spinning top candlestick pattern, engulfing pattern, Morning star, and Hanging Man.

What Is The Spinning Top Pattern?

The spinning top candlestick pattern is a type of chart pattern that indicates a possible trend reversal in the market. It is considered to be the most mysterious candlestick pattern because of its formation, which can occur by either an uptrend or downtrend. Let’s understand more about this chart pattern through this in-depth guide. 

What Are Bullish Harami Cross Candlestick Patterns?

The bullish harami cross candlestick pattern is a chart pattern that helps traders identify trend reversals in a bearish market. A bullish harami cross has two main components: A long red candlestick and a Doji candle. 

What Does Black Or Red Spinning Top Indicate?

A black or red spinning top candlestick indicates that throughout the trading session, bears were able to gain a little advantage. The appearance of the candlestick and what occurs after it appears are more important than its colour. The formation of both colour spinning tops at the peak or bottom of a downtrend may indicate a reversal.

What Shape Is A Spinning Top Candle?

A spinning top candlestick resembles a well-known children’s toy that spins on an axis to maintain speed after being twisted. Eventually, the top topples over as its velocity wanes. The pattern also shows momentum reverting in the opposite way after running out in an uptrend or decline.

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