Spinning top indicated indecision in the market between buyers and sellers. This pattern consists of small real body and long upper and lower shadows, indicating that both bulls and bears had control at some point during the trading period.
The image below will clarify this pattern in our minds.
Characteristics of Spinning top-
Small real body – It consists of small real body that indicates price difference between the open and close. It shows that price action is weak and not much active.
Long upper shadow and lower shadow – The presence of both long upper and lower shadows suggests that prices moved significantly higher and lower during the period. This shows confusion between the buyers and seller.
Indication –
Indecision – The spinning top pattern shows tussle between buyers (bull) and sellers (bear), resulting in indecision about the future direction of the market. It shows that neither the bulls nor the bears were able to dominate the trading session, leading to a relatively small net price change.
Potential reversal signal – standalone, itself doesn’t provide a strong signal, it becomes more impactful when it occurs after a strong price movement. It may indicate potential exhaustion of the prevailing trend and a possible reversal when it appears during uptrend or downtrend.
WARNING: Practically, it has been seen that confirmation from the upcoming candlestick is required to confirm the reversal of an uptrend or downtrend.
