The Spinning Top is a versatile candlestick pattern that signals a battleground between buyers and sellers where neither has gained control. It is identified by its small body and long upper and lower shadows, reflecting the indecision in the market.
Characteristics:
In the Spinning Top function, the candlestick's body size and shadow lengths are calculated and compared to predefined ratios to determine if the pattern is a Spinning Top. The body must be less than 20% of the total candle height, and both shadows should be significant, for example, each being at least 40% of the total candle height.
Trading Implications:
Spinning Tops are indicative of indecision in the market and can be found at the end of a prolonged trend or mid-trend, signaling a potential reversal or continuation, respectively. Traders often look for subsequent candles for confirmation:
It is crucial for traders to wait for additional confirmation through subsequent candles or other technical indicators before making trading decisions based on a Spinning Top. Acting prematurely can lead to misinterpretation, as this pattern primarily indicates market indecision rather than a definite change or continuation of a trend.