To give you even more data so that you can put this into context, a spinning top (at least according to Bulkowski) leads to a reversal 50% of the time. Alternatively, if you’re not into the hands-on approach, learning how to trade options through alerts from a team of experienced traders can be used to automate the process. Stock chart showing Apple’s performance and several candlestick patterns. With both of these variations, context is king – always look at the subsequent candles and the prevailing price trend. Let’s use a hypothetical example – a stock in a long-term downtrend prints a bearish spinning top.

Traders analyse its context, technical factors, and confirmation from other indicators to interpret its significance. The spinning top candlestick reflects market indecision and suggests a potential reversal or consolidation. Traders use this pattern as a tool to identify areas of uncertainty in the market. Therefore, it’s important to consider the spinning top pattern within the broader context and get confirmation from other analysis tools. In the EURUSD chart above, the red spinning top candle appears at the bottom of a downtrend. A trader went long on the closing of the bullish candle that followed the spinning top.

How can I find candlestick patterns on charts?

• The spinning top is a neutral candlestick pattern representing indecision between buyers and sellers at that point in time.
• It can lean slightly bullish or bearish depending on where it closes, but the overall message is indecision rather than dominance.
• However, certain candle shapes may give you some trading ideas, especially given the right context.
• Our 568 years of data show that Spinning Top candles occur three times more often than others.
• Traders seek confirmation from subsequent patterns or indicators before acting on such signals.

In derivative trading, ownership of the underlying assets is not transferred; traders speculate on price fluctuations. Understanding candlestick patterns and technical indicators, are essential for traders looking to gain insights into market sentiment and make informed trading decisions. Among the many popular candlestick formations, the spinning top pattern stands out for its unique characteristics and potential to show you the upcoming market direction. Because it highlights hesitation in momentum, the spinning top candlestick pattern becomes meaningful when it appears after a strong move or near key price levels.

Breaking Down The Spinning Top Candlestick

Second, like other technical indicators (notably, the RSI), you can also use the MACD to help you pinpoint specific points of market sentiment shifts. As shown, there are two primary lines—the blue (which is called the MACD spinning top candle line) and the orange (which is referred to as the ‘Signal’ line). The third variation shows two consecutive bullish-colored spinning top pattern.

This is because highly volatile assets that reflect a high degree of interest from market participants tend to move fast and sharply over a short period of time. 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. Finally, we would also like to show how prevalent indecisive candles—such as the spinning top—are in non-trending market conditions. 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.

CFD trading guide

This is because the spinning top appears more frequently on the chart during both trending and non-trending market environments. Hence, it is usually analyzed alongside the next candle to either confirm a trend reversal or a trend continuation. A neutral candlestick pattern, such as a spinning top, illustrate the current indecisive market sentiment. This means there is no clear winner between buyers and sellers. The asset is neither bullish nor bearish, and the price is at or near equilibrium. Hence, this pattern can signify a “decision point” on whether the trend continues or if a reversal appears.

We simply want to show that even “neutral” candles can have a bias toward a specific direction. For instance, if the spinning top develops on the daily chart, you can lower your time frame to hourly to see how it formed during the day. That said, this cycle can actually happen more than once, particularly if the asset is highly volatile (with high volume).

Likewise, the bears lose control when the spinning top candlestick forms at the bottom of a bearish trend. However, traders typically use ‘spinning top’ for the same candle structure regardless of the context in which it forms. A double spinning top consists of two consecutive spinning top candlesticks, representing extended indecision, where neither buyers nor sellers have taken full control for two sessions. However, it’s a powerful signal of a potential turning point in price. Both the spinning top and marubozu are one-candlestick patterns.

Is a spinning top bullish?

Green or white usually signals a bullish close while red or black leans bearish. But don’t let the color alone fool you because it’s only part of the whole picture. All traders would benefit from investing in a comprehensive trading training course to help them make more informed decisions while managing their risks properly. So why not check out Liberated Stock Trader’s advanced investing course today? Our extensive testing reveals that the Spinning Top pattern is slightly bullish.

• Only risk capital should be used for trading and only those with sufficient risk capital should consider trading.
• A spinning top candle is characterized by a small body and long wicks.
• It went into a consolidation forming several Spinning Top candlesticks within the flag.
• Traders typically either wait for further developments or look for additional signals to make their decisions.

These candles also make up larger patterns that can be either bullish or bearish. Patterns such as bull flags, bear flags, ascending triangles, and descending triangles. Regardless, proper risk management strategies, including setting appropriate stop-loss levels and take-profit targets, are essential when trading the spinning top. By integrating this pattern into a comprehensive trading strategy, traders can better anticipate market shifts and make informed decisions. Mastering the spinning top is essential for identifying market indecision and potential reversals.

Bearish Spinning Top Candlestick Pattern

The spinning top candlestick could signal a possible reversal as the bulls have taken over and maintained the price level. However, the third candlestick doesn’t confirm a reversal since the close is higher than the open. 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 reveals that neither buyers nor sellers have active control over the price, and both are fighting to gain the position of power. The spinning top candlestick is but one of many candlestick types. For crypto markets in particular, candlesticks remain invaluable. With high volatility, round-the-clock sessions, and strong emotional swings, they provide the fastest visual feedback of crowd psychology. Watch how the same pattern behaves differently in trending versus ranging markets.

Scenario #5: Choppy Market or Consolidation Period

Traders use it as an early signal to reassess trend strength, anticipate pauses, or prepare for potential reversals once a confirmation candle appears. A spinning top candlestick is a neutral candlestick pattern that reflects market indecision. It forms when the open and close prices are very close, creating a small real body, while both the upper and lower wicks stretch noticeably in each direction. The formation of the candlestick indicates a level of indecision among buyers and sellers, which depicts price reversals, hence creating a neutral pattern. However, the pattern of the candlestick is mostly found within an uptrend, a downtrend, and a sideways movement, indicating a potential reversal. The bullish trend increases the price further, while the bearish trend lowers the price until the overall price closes where it opened.

Therefore, Fib helps pinpoint valid target price levels and subsequent trailing stops. Moreover, Fib levels are stronger when they coincide with structural price (support and resistance) levels. The second variation shows a bullish-colored spinning top followed by a bearish-colored spinning top candle. The first variation above shows a bearish-colored spinning top followed by a bullish-colored spinning top candle.

We teach day trading stocks, options or futures, as well as swing trading. Our live streams are a great way to learn in a real-world environment, without the pressure and noise of trying to do it all yourself or listening to “Talking Heads” on social media or tv. The importance of controlling your emotions and having a proper mindset when trading. Yes, we work hard every day to teach day trading, swing trading, options futures, scalping, and all that fun trading stuff. But we also like to teach you what’s beneath the Foundation of the stock market. We don’t care what your motivation is to get training in the stock market.

The spinning top may indicate continued sideways movement, particularly if it appears within an established range. However, if it forms after a bullish or bearish trend, it could signal a potential price reversal. Traders always look for additional signals from confirming patterns or indicators to determine the possible market direction.