Spinning Top

A spinning top is a candle with a small body in the middle of its range and wicks of similar length above and below. It looks a bit like a child's spinning top. It shows that buyers and sellers both pushed price during the period but neither won: the market ended near where it started. Like the doji, it is a sign of indecision, and its meaning depends entirely on where it appears.

Anatomy#

The colour of the body matters little; a small green or red body both signal balance.

What it means in context#

• After a strong uptrend: buyers are losing momentum. A potential warning of a pause or reversal, especially at resistance.
• After a strong downtrend: sellers are losing momentum.
• Inside a range: normal and usually meaningless; ranges are full of balanced candles.
• Within a pullback in a trend: can signal that the pullback is ending as counter trend pressure fades.

Spinning tops in multi candle patterns#

Spinning tops often appear as the middle candle of reversal patterns:

• Morning and evening stars: the small middle candle is often a spinning top. See Morning Star and Evening Star.
• Harami: the small inside candle can be a spinning top. See Harami.
• Clusters: several spinning tops in a row at a level often show a market preparing for a bigger move, similar to compression. See Compression and Expansion.

How traders use them#

A spinning top is rarely a trade signal on its own. Common uses:

1. Trade management: tighten stops on open positions when spinning tops appear after a strong run.
2. Alert: mark the candle's high and low; a break of either often shows who won the standoff.
3. Confirmation building: combine with a following candle that closes strongly in one direction, at a key level, before acting.

Breaking the spinning top's range#

Because the candle represents balance, its high and low act as short term triggers. A close above the high after a downtrend suggests buyers have taken over; a close below the low after an uptrend suggests sellers have. Stops go on the opposite side of the spinning top's range.

Common mistakes#

• Treating spinning tops as reversal signals by themselves.
• Reading meaning into spinning tops in the middle of choppy ranges.
• Ignoring the trend's strength: strong trends often pause with spinning tops and continue.

Frequently asked questions#

What does a spinning top candle mean?#

Indecision: both buyers and sellers were active, but the candle closed near its open, showing neither side won the period.

Is a spinning top bullish or bearish?#

Neither on its own. After an uptrend it warns of fading buying pressure; after a downtrend, of fading selling pressure.

What is the difference between a spinning top and a doji?#

A spinning top has a small but visible body; a doji has almost no body, with open and close nearly equal.

Next, learn the candle with no wicks at all: the Marubozu.