Forex Spinning Top

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A spinning top forex pattern can appear after a strong bullish or bearish phase and signal a potential price reversal. In this article, we will explore a very popular candlestick pattern – the spinning top forex pattern – what it means when you see this pattern on your chart, and how to trade it. Candlestick charts are the most popular charting method among traders, and they can provide insightful information about investor emotion and sentiment. They are also constantly analysed by traders in an effort to identify recurring patterns that can appear in any market and timeframe. HowToTrade.com takes no responsibility for loss incurred as a result of the content provided inside our Trading Room.

Therefore, this action translates to a stalemate in the https://forexdelta.net/ session since neither bulls nor bears dominated. Spinning tops that appear at higher timeframes such as daily, weekly, & monthly are more significant than those which appear within intraday timeframes. Today, were going to cover another low float parabolic stock, OPTT. There have been many of these types of trades in the last couple weeks. With the RSI crossing above the lower horizontal line and the confirmation candle breaking above the spinning top’s high, a buy order was placed a few pips above the confirmation candle’s high.

What does the Spinning Top Candlestick Pattern show?

This could signal to you that more sideways movement is coming and you could start to look for new range trades. With that said, depending on where the spinning top forms it can signal a new potential bullish or bearish move. The pattern shows indecision and greater odds of a reversal of the current trend or at least the beginning of sideways price action. You don’t know which way, though the expectation is obviously bearish given the recent drop, so you wait for more price action. 2 hours later, 3 consecutive big bearish pin bars form, telling you the bears have probably won the battle and that price could be about to fall, which it then does. We know a spinning top at a technical point reveals sellers think the price is too low/high – a good indication price is probably going to reverse.

The RSI indicator therefore functioned as the first additional confirmation method required to trade this pattern, which will help you trade the highest-probability spinning top setups. Learn everything you need to know about trading the markets from beginner level to the most advanced, helping you to create critical skills and techniques to you can apply in your trading right away. Funded trader program Become a funded trader and get up to $2.5M of our real capital to trade with.

Spinning Top Candle Pattern Explained

On EUR/USD the bullish pattern appearance was more reliable with a 57% success rate, and a small average profit of 0.4%. The size of the draw-down and draw-up over the 15 bars following each spinning top signal were examined. The signal was classified as a bullish true positive if the price high watermark size was greater than the price low watermark. If one of the shadows touches a support or a resistance line, or even breaches it temporarily, this will add weight to the case for a reversal. Like the high wave, spinning tops often form in clusters in areas of consolidation.

• The spinning top is a pattern that has a small candlestick body and upper and lower wicks or shadows of similar lengths.
• Below, we are going to show you the two types of spinning top patterns combined with Fibonacci support and resistance levels – bullish and bearish spinning top patterns.
• Even though the two prices stick together in all situations, a spinning top includes close below and above the open.
• Cory is an expert on stock, forex and futures price action trading strategies.
• Both patterns occur frequently and are sometimes used to warn of a reversal after a strong price move.
• The spinning top shows the same information just over one candlestick and not many.

A top-spinning candlestick is a pattern that appears on candlestick charts and can be used to identify potential market reversals. A relatively small body characterizes it with long upper and lower shadows. This candlestick tells traders that the bulls and the bears were both in control at some point during the trading session, but neither had enough power to push prices higher or lower significantly. In other words, it indicates indecision from buyers and sellers regarding where the market should go next.

As with most candlestick patterns, technical traders will often use additional confirmation methods to help them identify the patterns that may lead to the best trading opportunities. However, by the time the candles closed, their closing prices were located near their opening prices. As a neutral candlestick pattern, the spinning top can be formed in charts in different scenarios. The implication of this candlestick pattern is a temporary uncertainty in the market and indecision from participants about the next price movement of the specified currency pair.

Uploaded by gold tolani https://traderoom.info/ © dominantThe wicks of the candlestick in the image above illustrate where price visited but was not sustained. In the case of a spinning top, there are upper and lower wicks showing both buyers and sellers could not sustain their strength. Even though the candle next to the Spinning Top is bearish, there is indecision between buyers and sellers. In this scenario, we may wait for the price actions and then go long or short. Due to these indicators, they’re able to have more information and insight into the price trends. For instance, if a trader is convinced that the spinning top of the downtrend’s bottom can indicate the upcoming reversal, a trader can test the signal with the stochastic oscillator.

By signing up as a member you acknowledge that we are not providing financial advice and that you are making the decision on the trades you place in the markets. We have no knowledge of the level of money you are trading with or the level of risk you are taking with each trade. When the spinning top formation occurs, traders should wait for the next candle to be completed. Additionally, it is important to combine other trend reversal tools like Fibonacci ratios, RSI, moving averages, and MACD. In the other direction, a bearish spinning top pattern occurs at the top of a trend and may signal a price reversal and a new trend direction. Identify a spinning top candlestick on a chart – Look for a candlestick with small real body and long upper and lower shadows.

How to Trade the Bullish Spinning Top Candlestick Pattern

With this strategy, the RSI indicator plays a key role in detecting whether a market is in an oversold or overbought condition. The blue line of the indicator is the RSI line, and the black-dashed horizontal lines represent levels where a market is considered oversold or overbought. With that in mind, let’s see what the spinning top pattern looks like on a trading chart. Trading Strategies Learn the most used Forex trading strategies to analyze the market to determine the best entry and exit points. However, each trading method comes with varied risk descriptions.

These are important price levels which I look for and identify in advance and then I wait to see if price reaches these levels. But for my case, I don’t consider a spinning top candle as a neutral candlestick at all. A spinning top can signify a future price reversal if confirmed by the next candle. The buying pressure causing the uptrend is paused for a moment of indecision , and that lost momentum could signal that the current trend has come to an end. But within the session, the buyers and the sellers both had the upper hand at one point, which shown by the long upper and lower shadows.

Similarly, a Spinning Top candlestick pattern represents indecision. Spinning Top candlesticks usually have small bodies with upper and lower shadows that exceed the length of the body. A Spinning Top is interpreted as a neutral pattern but gains importance when it is part of other candlestick formations. Determine significant support and resistance levels with the help of pivot points.

Always consider other patterns and indicators, confirm the signal, and make sure not to stray from your trading plan and risk management strategy. The Spinning Top Candlestick Pattern can be used on your trading platform charts to help filter potential trading signals as part of an overall trading strategy. As mentioned earlier, the Spinning Top can appear in an uptrend or downtrend, so it provides both buying and selling forex trading signals.

So, if you spot one on a chart, it’s likely just a breather in a broader continuation. Trading is challenging, and there isn’t one perfect system, indicator or candlestick that is infallible. BlackBull Markets is a reliable and well-respected trading platform that provides its customers with high-quality access to a wide range of asset groups. The broker is headquartered in New Zealand which explains why it has flown under the radar for a few years but it is a great broker that is now building a global following. The BlackBull Markets site is intuitive and easy to use, making it an ideal choice for beginners. 73.05% of investors lose money when trading CFDs with FXCM Enhanced Execution and pricing.