A Spinning Top is a Japanese candlestick with a small real body and long upper and lower shadows.
The short body of the candle suggests that there was a lot of indecision in the market regarding the direction of the price, while the long shadows indicate that both buyers and sellers were active during the session.
Children’s spinning tops are the inspiration for the naming of the Spinning Top candlestick pattern.
Similar in shape to its toy counterpart, a Spinning Top has a short body (black or white) and two long shadows. The size of shadows can vary.
Spinning Tops signal indecision. The smaller the body, the less direction the market has.
A Spinning Top is interpreted as a neutral pattern but gains importance when it is part of other candlestick formations.
The Spinning Top looks like the Doji. Both patterns feature a single candlestick with a long wick extending from the top as well as the bottom.
It’s easy to differentiate between the two because one has a body (the Spinning Top) and the other does not (the Doji).
So when spotting a Spinning Top candlestick pattern, look for a single candlestick with a short body between two long shadows. The color of the body is not important.
Spinning Top candlesticks usually have small bodies with upper and lower shadows that exceed the length of the body.
When you think of the Spinning Top candlestick pattern, think of an actually spinning top.
When it’s spinning smoothly, you don’t know when it will stop spinning and which direction it’ll fall.
Similarly, a Spinning Top candlestick pattern represents indecision.
Neither the buyers nor the sellers had control.
As seen in the short body of the candlestick, the market didn’t change much when it closed versus when it opened.
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.
Due to this indecision and uncertainty, it is hard to know where the market will head next.
Because it is neither bearish nor bullish but simply neutral, a Spinning Top appears in both uptrends and downtrends.
If you do spot a Spinning Top after an uptrend or a downtrend, it may signal a potential reversal.
The buying (selling) pressure causing the uptrend (downtrend) is paused for a moment of indecision (represented by the Spinning Top), and that lost momentum could signal that the current trend has come to an end.
Spinning Tops frequently appear in charts but are not very reliable on their own. They should be used in combination with other forms of technical analysis like support and resistance.