Spinning Top
Tue, Apr 15A Spinning Top is a Japanese candlestick that features a small real body along with long upper and lower shadows. The short body signifies considerable indecision in the market concerning price direction, while the extended shadows indicate that both buyers and sellers were active during the trading session. The term 'Spinning Top' is derived from children's spinning tops, as the candlestick resembles this toy. It consists of a short body (which can be either black or white) and two long shadows, with varying lengths.
Spinning Tops represent indecision; the smaller the body, the less directional the market appears. Although a Spinning Top is typically viewed as a neutral pattern, its importance increases when it appears alongside other candlestick formations. It bears resemblance to the Doji pattern, which also features long wicks extending from both the top and bottom, but the main distinction is that the Spinning Top has a body, while the Doji does not.
To identify a Spinning Top, look for a single candlestick with a short body situated between two long shadows, with the color of the body being irrelevant. Generally, Spinning Tops have small bodies with upper and lower shadows that are longer than the body itself.
When considering the Spinning Top candlestick pattern, imagine an actual spinning top. When it spins smoothly, it’s uncertain when it will stop and in which direction it will fall. Similarly, the Spinning Top candlestick pattern reflects indecision, indicating that neither buyers nor sellers have control. The short body of the candlestick suggests minimal change in market price from open to close, yet during the session, both buyers and sellers had moments of dominance, as illustrated by the long shadows.
Due to this uncertainty, predicting the market's next move becomes difficult. As a neutral pattern, a Spinning Top can appear in both uptrends and downtrends. If a Spinning Top is seen following an uptrend or downtrend, it may signal a potential reversal. The buying (or selling) pressure that propelled the trend is temporarily halted, represented by the Spinning Top, suggesting that the current trend may be losing momentum. While Spinning Tops are frequently found in charts, they are not very reliable on their own and should be evaluated in conjunction with other technical analysis tools, such as support and resistance levels.
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