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Marubozu Candlesticks: A Trader’s Guide Shaved Candlesticks: A Trader’s Guide
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Spinning Top Candlesticks: A Trader’s Guide

The Spinning Top candlestick is a unique pattern in technical trading. Its structure offers a glimpse into the market’s indecision, providing traders with potential trading opportunities across various periods.

What is the Spinning Top Candlestick?

A Spinning Top candlestick is characterized by its small body and long upper and lower shadows. The small body represents a close price that’s very close to the open price, signaling indecision between the buyers and the sellers. The long shadows, on the other hand, indicate that both bulls and bears were active during the period, but neither could secure a victory.

  • Small Body: The body of the candle (the difference between the open and close prices) is small, representing indecision.
  • Long Shadows: Both the upper and lower shadows (the lines extending from the body representing the range between the high and low prices) are long, showing a wide range of price action during the period.
  • Color Irrelevant: The color of the candle, whether bullish (typically white or green) or bearish (typically black or red), doesn’t necessarily impact its interpretation.
Spinning Top Candlesticks

How to Identify the Spinning Top Candlestick

Identifying a Spinning Top requires keen observation of your candlestick chart:

  1. Look for a candlestick with a short body. This means the open and close prices are near each other.
  2. Check that long shadows are extending from both ends of the body. These should be roughly equal in length.
  3. Note that the color of the candlestick, whether bullish or bearish, does not alter the interpretation of the Spinning Top.

How to Trade the Spinning Top Candlestick

A Spinning Top signifies market indecision, which can precede a potential price reversal or a continuation, depending on the overall trend and subsequent candles.

  • In an uptrend: If a Spinning Top forms during an uptrend, it may indicate that the buyers are losing control and a bearish reversal might be on the horizon. However, confirmation from the next candle or another indicator is necessary before taking a position.
  • In a downtrend: Conversely, if it appears in a downtrend, it could suggest that sellers are losing steam and a bullish reversal could be imminent. Again, confirmation is crucial.

Example scanner based on Spinning Top Candlesticks

Spinning Top Candlesticks can be used in Scanning the market. To see how exactly they can be used in this way, we provide the following sample. This is a scanner that searches the market for stocks using these candlesticks.

"Any Spinning Top Example Scanner" scanner by Dan Ushman
charts.trendspider.com
“Any Spinning Top Example Scanner” scanner by Dan Ushman

Trading Tips

  • Confirmation is key: Always wait for the next candle or use another indicator for confirmation before making a trading decision.
  • Use in conjunction with other technical analysis tools: As the Spinning Top represents indecision, using other indicators or patterns can provide additional context and improve the accuracy of your predictions.

Example

Consider a period where a robust uptrend has been in play. Suddenly, a Spinning Top candlestick forms. This signals a potential shift in market sentiment. The next period opens lower and closes even lower, confirming a bearish reversal. Acting on this confirmation, you could have entered a short position at the opening of this confirming period, potentially capturing profits from the ensuing downtrend.

In conclusion, the Spinning Top candlestick is a useful pattern that signals market indecision. By understanding its formation and trading it effectively, you can enhance your trading strategy and potentially maximize your profits.

Spinning Top Candlesticks example

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Marubozu Candlesticks: A Trader’s Guide Shaved Candlesticks: A Trader’s Guide