Candlestick patterns are vital tools in technical analysis, and the Spinning Top is one of the most subtle yet significant of them. It signals indecision in the market and often precedes major reversals or trend continuations — depending on the context.
In this article, you’ll learn:
- What the Spinning Top candlestick pattern is
- What it tells us about market psychology
- Strategies to trade the pattern effectively
- Examples of entry/exit setups
- Risk management tips
🔍 What is a Spinning Top Candlestick Pattern?
A Spinning Top is a single candlestick pattern characterized by:
- A small real body (open and close are close to each other)
- Long upper and lower shadows, showing significant price movement in both directions
- Can occur in bullish or bearish trends
Visual Representation:
This pattern reflects market indecision. Bulls and bears both tried to dominate the session, but neither succeeded.
🧠 What Does the Spinning Top Tell Us?
- Buyers and sellers are equally strong
- Market is losing momentum
- Often appears before trend reversals, pullbacks, or sideways consolidation
- Volume and position in the trend are critical for interpretation
📌 Key Characteristics
| Feature | Description |
|---|---|
| Body Size | Small (open ≈ close) |
| Shadows/Wicks | Long upper & lower shadows |
| Color | Doesn’t matter much |
| Signal | Indecision or potential reversal |
✅ Ideal Conditions for Trading Spinning Tops
To increase accuracy:
- Confirm with trend direction: Spinning tops in uptrends may signal reversal; in downtrends, possible bottom.
- Volume analysis: Higher volume adds credibility.
- Support/Resistance Zones: Best when they appear at major levels.
- Use with indicators: RSI, MACD, Moving Averages enhance decision-making.
📈 Trading Strategies for Spinning Top Candlestick
1. Reversal Strategy with Confirmation
Best used when a spinning top appears at the end of a trend.
Steps:
- Wait for the spinning top to form after a sustained trend.
- Confirm reversal with:
- Next candle closes in the opposite direction (e.g., bearish candle after an uptrend).
- RSI divergence or MACD crossover.
- Entry: On confirmation candle close.
- Stop Loss: Above/below the high/low of the spinning top.
- Take Profit: Use nearest support/resistance or Fibonacci levels.
Example:
Spinning top at the top of an uptrend + bearish engulfing next candle → Sell.
2. Trend Continuation Strategy
Sometimes spinning tops represent a pause before the trend resumes.
Steps:
- Identify a strong trend (price above/below 20 EMA).
- Spot spinning top during a pullback or sideways movement.
- Wait for a breakout candle in trend direction.
- Entry: On breakout candle close.
- Stop Loss: Below/above the spinning top.
- Target: Trendline or last swing high/low.
Example:
Uptrend → Spinning Top → Breakout bullish candle → Buy.
3. Support & Resistance Bounce
Use spinning tops that form exactly at support or resistance zones.
Steps:
- Mark major horizontal levels.
- Wait for spinning top to form at level.
- Entry: After confirmation candle in expected direction.
- SL/TP: Standard or use 1:2 risk-reward.
Example:
Price hits strong resistance → Spinning top → Bearish confirmation → Short trade.
4. Spinning Top + RSI Divergence
Steps:
- RSI shows divergence (e.g., price makes higher high, RSI makes lower high).
- Spinning top forms at the swing high/low.
- Enter trade with tight SL.
- Target based on structure.
Bonus Tip: Combine this with candlestick reversal patterns like Doji or Engulfing.
5. Multi-Timeframe Confirmation
Use spinning top patterns from lower timeframes (15M/1H), confirm trend on higher timeframes (4H/1D).
Steps:
- Identify overall trend on 1D chart.
- Drop to 15M/1H.
- Look for spinning tops at pullbacks or S/R zones.
- Confirm with breakout or volume spike.
⚠️ Common Mistakes to Avoid
- Trading every spinning top blindly
- Ignoring trend context
- Not waiting for confirmation candle
- Using oversized position sizing
- Placing tight stop loss directly on the body
🎯 Risk Management Tips
- Use 2% risk rule per trade
- Always set stop loss
- Use position sizing calculators
- Set realistic risk-to-reward (minimum 1:2)
📊 Real Example: Spinning Top in Action (Hypothetical)
Stock: XYZ Ltd
Trend: Uptrend for 7 sessions
Pattern: Spinning top appears at resistance ₹1,250
Next candle: Bearish engulfing
RSI: 75 (overbought)
Action: Short at ₹1,240
Stop Loss: ₹1,255
Target: ₹1,200 (support zone)
Result: +40 points profit
🧩 Final Thoughts
The Spinning Top candlestick pattern is powerful when used correctly — not in isolation, but as part of a confluence-based strategy. Always pair it with other indicators like RSI, MACD, trendlines, and volume to increase your win rate.
When spotted at key decision points like major support, resistance, or trend exhaustion zones, it can be a game-changer for your trades.