While Spinning Tops alone aren’t always definitive, they can serve as a precursor to larger moves if the following candles confirm a shift in sentiment. A spinning top pattern can be either bullish or bearish – if the closing price is higher than the opening price, the spinning top candle is bullish. If the closing price is lower than the opening price, then the spinning top candle is bearish. To give you even more data so that you can put this into context, a spinning top (at least according to Bulkowski) leads to a reversal 50% of the time. It is important to distinguish between the two to make informed trading decisions.
What Is A Bearish Spinning Top Pattern?
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. HowToTrade.com helps traders of all levels learn how to trade the financial markets. In this chart, we have the perfect combo to enter a short-selling position – that is, spinning top pattern, double top pattern, and the intersection at the 61.8% Fibonacci level. As you can see, the market stopped exactly at the 61.8% Fibonacci level where the spinning top pattern was formed.
These little candlesticks, with their short bodies and long shadows, might look like just another shape on the chart, but they speak volumes if you know how to listen. They often hint at a tug-of-war between buyers and sellers, a kind of market hesitation that traders can’t afford to overlook. In my experience, catching these subtle pauses can be the difference between jumping in too early or holding your nerve for the right moment.
And even so, candlestick analysis alone is not enough to trade spinning top candlestick pattern successfully. In fact, you’re free to forget all of the names as long as you can look at a candlestick and understand what it means. You can never be 100% sure how a candlestick will look at the end of the time period.
Bullish Abandoned Baby
- The secret to successful timing lies in understanding when the power balance in the market is about to shift.
- A bullish candle formed when price first entered the zone, but that got taken south.
- This is where reversal candlestick patterns become your most powerful tool.
The Kicker has long been recognized in candlestick analysis as one of the strongest signals. Bullish Kicker is a dramatic two-candle reversal pattern where a bearish candle is followed by a bullish candle opening with a strong gap up. Bullish kicker represents a sudden, sharp shift in market sentiment.
How to Buy Stocks Using Bullish Candlestick Patterns?
The formation of a spinning top candlestick helps determine the probability of a price reversal especially if it happens after a price decline. Because of the small variation in the market trend, the candlestick is referred to as a continuation pattern. Once the price created a falling wedge pattern, the trend reversed and entered a rising wedge pattern. Many times, charts will consist of both rising and falling wedges. It’s important to find these patterns by drawing your trendlines.
Arjun is also an certified stock market researcher from Indiacharts, mentored by Rohit Srivastava. Traders must combine these patterns with VWAP, moving averages, or order flow tools. This prevents false entries and improves consistency in shorter timeframes. Understanding the distinction helps traders align strategy with market phase. Reversals capture bottoms, while continuations ride existing momentum.
#3 They Don’t Indicate A Reversal Simply A Pause
Bullish Belt Hold is a single bullish candle that opens with a gap down but closes near the high of the session. Bullish belt hold shows that despite initial weakness, buyers dominated throughout the day. Traders regard it as extremely powerful because it demonstrates complete rejection of prior bearish sentiment. It is rare but considered one of the highest-probability signals. It forms when profit-taking or minor selling interrupts an uptrend, but bulls quickly reassert themselves with a decisive rally. The final candle demonstrates that the bullish trend remains intact.
Trading with the spinning top pattern can be done using derivatives like trading contracts for difference (CFDs). It means that the trader does not need to own the underlying assets but can speculate on their price pattern. The idea behind indecision manifested in the market throughout the formation of the spinning top is that buyers and sellers move prices higher and lower during the trading process. It causes the closing price to reverse back closer to the opening price, and the bull trader forces it back to the top before the market closes.
A green (or white) candle means price closed higher than it opened — buyers dominated. A red (or black) candle means it closed lower — sellers had control. A long wick shows rejection or indecision, while a large body reveals conviction.
- The bullish spinning top pattern occurs at the bottom of a downward trend and may signal a bullish trend reversal.
- Another challenge is that a newbie could mistake other candles for spinning tops, given the potential similarities.
- When it appears after a strong move, it can alert traders that momentum may be fading.
- If the next candle moves upward, it can confirm the shift in sentiment.
- This ensures patterns are profitable before risking real money.
Triple structures carry more weight as they demonstrate sustained buyer control. For example, in highly liquid markets like U.S. equities, patterns hold better due to stronger participation. In contrast, illiquid penny stocks or low-volume crypto pairs often produce deceptive signals. They are more effective in trending or oversold markets but unreliable in sideways, low-volume conditions. It occurs when initial bearish sentiment fails to extend, and the market reopens at the same level only to be taken over by buyers. The pattern highlights strong conviction that the uptrend will continue.
Finally, both the spinning top and dragonfly doji are also one-candlestick patterns. In terms of use case, dragonfly dojis are similar to the hammer and bullish pin bars. This is perhaps unsurprising considering the similarity in appearance of the three candlestick patterns. In contrast, a doji candlestick pattern usually has no real body and relatively much shorter wicks. There is no difference in how both are used, as they can be used effectively in both uptrends and downtrends, except, of course, during non-trending periods.
For instance, this can look like a major breakout from a prolonged sideways movement. When such a breakout occurs, it usually catapults the price, making substantially higher highs and higher lows in just a few trading sessions. This is useful when your trading strategy is intraday in nature (assuming your chart is set to daily) or when you want to dispose of your asset at the following day’s opening. However, this is not a substitute for the following candle to serve as a confirmation—which is much more reliable. We simply want to show that even “neutral” candles can have a bias toward a specific direction.
With options experiencing high volume and liquidity, there’s money to be made in the market – and identifying a trend reversal is one of the most surefire ways to do just that. Understanding market sentiment is a tall order – there are countless factors at play, but there is a way to neatly summarize those factors, and they are called chart patterns. I’ll be the first to admit that spinning tops aren’t the most useful of candlesticks. So again, DO NOT use spinning tops as reversal signals, they don’t work. The candle doesn’t reveal who won the battle, only that it took place! You have to wait for the next candle to show a pin bar or engulf to know who’s now in control of price.