What it looks like
A small body, larger than a doji's but well under half of the candle's range, sitting near the middle. Upper and lower wicks of similar length. The body's colour does not matter much.
What it means
Neither side won the candle. After a strong move, that hesitation can be the first sign the move is tiring, because the side that had been in control could not finish the candle on its terms. In a quiet, sideways market the same candle means nothing, which is why the break of its high or low matters more than the candle itself.
How to trade it
- 1
Never trade it on its own. Mark the candle's high and low.
- 2
Confirmation: a later candle closes above the high (buy signal) or below the low (sell signal).
- 3
Entry: at the close of that breakout candle.
- 4
Stop: on the other side of the spinning top. Example on gold: a spinning top forms from 4,030 to 4,038 at resistance. A candle closes at 4,028. Sell at 4,028, stop at 4,040, a 12 point risk.
- 5
Target: the next key level, or 2 times the stop.
Price closes back inside the candle's range after breaking out of it.
Where it works best
After a strong move into a key level on 1 hour to daily charts, where hesitation actually means something.
WickSpeak spots every spinning top automatically and names it on the candle that made it. The note says what it is, that it should not be traded alone, how to trade the break of its high or low and what proves that break wrong. In Playbook you can use it as a condition in a play, alone or alongside other patterns and indicators (any of the 146 patterns can be a condition), and backtest it on past candles with your own costs.
Common mistakes
- Confusing it with a hammer or shooting star, where one wick is much longer.
- Trading the spinning top itself instead of the break of its range.
- Giving it meaning in a quiet market.
Related patterns
Questions traders ask
What does a spinning top mean?
Neither buyers nor sellers won the candle. It is indecision, and only matters after a strong move or at a key level.
Is a spinning top bullish or bearish?
Neither on its own. The next close above its high or below its low gives the direction.
How is a spinning top different from a doji?
A doji's open and close are almost equal. A spinning top has a small but visible body.
What cancels a spinning top breakout?
A close back inside the candle's range after the break.