Simple Spinning Top Candlestick Pattern Trading
Why do Spinning Top patterns matter a Lot?
The Spinning Top Candlestick Pattern is now gaining high popularity among traders especially who are dealing in forex, crypto, and stocks. In this article, we will try our best to discuss how we can use this pattern to boost our trading success.
What does a Spinning Top Pattern look like?
It is very simple to find this pattern on our charts. This pattern has a very small body and contains a long upper/lower shadow. This pattern shows us the indecision between the buyers and sellers.
Key Point of Spinning Top Candlestick Pattern
This pattern provides traders with a hint of market sentiment. This pattern helps traders to get ready for the next price movements.
How to Find a Spinning Top Candlestick On Chart?
A Spinning Top has a very small body in a normal case. Moreover, it can have long wicks on both sides and its size must be smaller than the size of the wicks.
What does a Spinning Top Mean in Forex
In forex, Spinning Top has a high importance because it provides us with a message that the trend can continue or reverse. It also gives us the possible idea that the buyers failed to get full control of the market. It is always better to wait for the next candlestick to close in the upward direction to check the market’s future direction.
Why This Pattern Is Important in the Crypto Currency Market?
Similarly, like forex, this pattern is quite helpful in trading the crypto markets. This pattern suggests to traders that the price can continue, pause, and be a sign of trend reversal. It is better to wait for the next candle after the formation of this pattern then we can make better trading decisions.
Light On Bullish and Bearish Spinning Top Pattern
This is simple because we can find the bullish pattern at the end of the downward trend. In this way, it indicates the potential upward reversal. On the other hand, we can find the bearish pattern at the dead end of an upward trend. It indicates that prices can fall.
How to Trade a Bullish Spinning Top
As we have already discussed the bullish spinning top appears in the downtrend. So it is very essential for the traders to wait for the next candle. If the next candle is successfully closed green then it can be a very good time to enter into a buy trade.
Trading with Bearish Trading Pattern
Just like the bullish spinning top, we will reverse the situation in that case. As we know that bearish spinning top arises in an upward trend. So traders must look at the next candle close. If the next candle is successfully closed bearish then it is considered the best time to enter into the short position. Please, note that you should always manage your risk by placing a tight stop loss above the high of the spinning top.
Avoid these Mistakes for Better Trading
Most of the traders enter into their trades without having a proper confirmation of the pattern. The traders must avoid executing early trades. The second advice from my side is not to trade just based on this pattern otherwise it will be very risky for your trading outcomes.
Spinning Tops + Other Indicators
You should use Spinning Top in combination with other famous indicators like MACD, RSI, Stochastic, and Moving Averages. For example, if we have a condition that RSI is over-bought and we see a bearish spinning top then it can be a valid trade. We should not trade all spinning tops. It is important that we need to filter out the right spinning tops for our trades.
Short Summary of the Article
- This pattern gives us the message that the trend maybe getting tired and wants to reverse in another direction.
- This pattern helps the traders to understand the market sentiment and get ready for further price movements.
- It indicates the reversal or continuation of the trend.
- You should always wait for proper confirmation before you execute your trade.
- This pattern should be traded with other technical indicators.
- It is important for traders to avoid jumping into trades too early.
If you want to join the best-regulated broker that offers you low spreads then please click on the button given below.
If you are interested in 1 to 1 live coaching session then please click here.