Candlestick with rolling top is quite curious. It does not provide the trader with trading signals with any specific entry or exit points, unlike Marubozu.
However, Spinning Top provides insightful data about the state of the market at the moment.
A candlestick pattern known as a spinning top features a small body located vertically in the middle of the extended upper and lower shadows. Candlestick patterns reflect uncertainty over the future course of an asset. In other words, neither buyer nor seller could prevail.
Introduction:
Candlestick patterns are created when buyers and sellers respectively push the price up for a predetermined amount of time, but ultimately the closing price ends up very near the open. If this candle is confirmed, spinning tops could signal a potential price reversal after a significant price move up or down.
Confirmation makes Spinning Top’s message more understandable. The following candle provides confirmation. The candle following the Spinning Top should show a decline in price if a trader believes that showing a Spinning Top after an upswing could lead to a reversal to the negative. If not, the reversal is not confirmed, and the trader must wait for a new signal to enter the market. If a spinning top appears within a range, it means there is still a lot of uncertainty, and the range is likely to be final. If the subsequent candle is confirmed, it will remain in the established sideways channel.
What is the Spinning Top Candlestick Pattern?
The close and open prices on Spinning Top are never far apart, whether the close is higher or lower than the open.
Spinning tops can sometimes reflect a substantial shift in trend. At the top of an uptrend, a spinning top may indicate that the bulls are losing control and the trend may be about to change. The bodies of the candles are very small.
The lower and upper shadows are approximately equal. The spinning top appears to be a candle with a small real body outside, but some dramatic things happened during the day.
Formation of Spinning Top Candlestick Pattern
The open price and close price are relatively close, as indicated by the small real body.
The color of the candle is not really important because the opening and closing price points are close to each other. The fact that the open price and close price are close to each other is what is most important.
- small real body
- upper shadow
- The Lower Shadow
small real body-
This shows that the open price and close price are very close. For example, open could be 210, and close could be 213. Or open may be 210 and close at 207. Both of these situations create a small real body because a 3 point move on a Rs 200 stock is not much. Because the open and close price points are close to each other, the color of the candle doesn’t really matter. It can be a blue or red candle, what really matters is how close the open prices and closing prices are to each other.
upper shadow –
The upper shadow connects the real body to the high point of the day. If it is a red candle, the high and open are connected. If it is a blue candle, the high and close are connected. If you thought about the real body with the upper shadow while ignoring the lower shadow, what do you think happened? The presence of the upper shadow tells us that the bulls attempted to move the market higher. However, they did not actually succeed in their endeavor. If the bulls were truly successful, the actual body would be a long blue candle, not a truly short candle. So this could be seen as an attempt by the bulls to drive the market higher, but they didn’t really succeed.
Lower shadow –
The lower shadow connects the real body to the low point of the day. If it is a red candle, the low and close are connected. If it is a blue candle, the low and open are connected. What do you think would have happened if you ignored the upper shadow and thought about the real body with the lower shadow? This is exactly the same thing that happened with the oxen. The presence of the lower shadow tells us that the bears attempted to move the market lower. However, they did not actually succeed in their endeavor. If the bears were truly successful, the actual body would be the long red candle, not the actual short candle. Therefore, the bears’ attempts to drive the market down can be considered as an attempt, but they did not actually succeed.
The fact that the upper shadow is present indicates that the bulls have tried to drive the market higher. However, he was not really successful in his quest. The actual body – instead of actually being a short candle – would have been a long blue candle if the bulls had actually been successful. As a result, this could be seen as a failed attempt by the bulls to keep the market higher.
Similar to what happened with beer. The lower shadow is present indicating that the bears try to short the market. They were unsuccessful, however. The actual body would have been a tall red candle as opposed to a short candle had the bear been successful. As a result, this can be seen as a failed attempt by the bears to short the market.
How to Trade the Spinning Top Pattern with Examples?
Explanation: A spinning top tells traders that there is uncertainty in the market because there was not much change in the opening and closing prices. This could mean that more neutral movements are ahead, or a price reversal is about to occur. If the spinning top is seen below the downtrend, it could mean that a bullish reversal may occur. Conversely, if it occurs at the top of an uptrend, it may indicate a bearish reversal. At the price level of 3320 INR, there is a spinning top and uncertainty in the sideways market.
Difference between spinning top and doji?
Doji and spinning tops both stand for uncertainty. Doji are small, with small upper and lower shadows as well as small actual bodies. Upper and lower shadows can be seen on the rotating top. Both patterns are common and can be used to signal reversal after a significant price break. Both types of candlesticks depend significantly on confirmation. Instead of a spinning top or doji, a big move that follows provides additional information about the next potential price direction.
Conclusion
Visualizing the spinning top in its entirety including the true body, upper shadow and bottom shadow. Bulls tried in vain to push the market higher. Efforts to drive the markets lower failed. Little real body evidence that neither bulls nor bears can have any kind of impact on the market.
Therefore, spinning tops are a sign of a market with major ambiguity and decision making. If we look at it alone then the value of Spinning Top is slightly less. Since neither the bulls nor the bears were able to influence the market, it simply shows hesitancy.
But when we look at the spinning top in relation to the chart’s trend, it actually sends a strong signal that we can use to decide how to position ourselves in the markets.
