A Spinning Top is a candlestick that indicates indecision in the market. It can be a warning signal that a potential change in outlook is developing. It is a small-bodied candlestick with long upper and lower shadows.
The position of the candlestick “body” around the mid-point of the daily range suggests neither the buyers nor the sellers have decisively won the session. It is similar to the “Long-legged Doji”. However, unlike the doji pattern, a Spinning Top does hint at the next potential direction, with the CLOSE price being slightly above or below the OPEN.
What does the Spinning Top indicate?
A Bullish Spinning Top has a CLOSE slightly higher than the OPEN and hints at the buyers trying to gain control. A Bearish Spinning Top has the CLOSE below the OPEN and suggests that the sellers are getting ready to control the market.
The indication of the uncertainty and potential change in outlook are best taken following a trending phase in the market. If a Bullish Spinning Top is seen after a long downtrend (ideally after a long run of negative candlesticks) this is a good indication that the market may be in the process of turning.
Understanding Spinning Top signals
This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. INFINOX is not authorised to provide investment advice. No opinion given in the material constitutes a recommendation by INFINOX or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. All trading carries risk.