Spinning top candle is one of the most important candle patterns to look for while trading, this gives you trend reversal signal. If there is sharp up/downtrend and you see there is spinning top no matters whether it is bullish or bearish there is a possibility of trend changing.
Let's understand the formation of spinning top candle:
Spinning top candle is very easy to recognize in the chart as it has a very small body with long shadows and there is a very nominal difference between the open and close price of the stock. Spinning top shows the indecision between buyer and seller in the market.
• Small body with long shadow (wicks).
• Both the shadows are almost equal in length.
• Shows indecision between buyer and sellers.
• Give trend Reversal Signal.
How to use spinning Top candlestick:
This is a very important thing to discuss, how and when to use spinning top candlestick to make your trade accurate.
If there is downtrend and in the chart bearish candles are forming from the last couple of sessions for any stock and then you see a bullish spinning top candle formed, do not take buy position straight away wait for the next candle to be formed if next candle is again bullish then there is more possibility to change the trend from here and you can take position now.
If there is uptrend and in the chart bullish candles are forming from the last couple of sessions for any stock and then you see a bearish spinning top candle formed, wait for the next candle to be formed if next candle is again bearish then there is more possibility to change the trend from here and you should exit from your existing position or you can take short position from here.
If you prefer a video explanation of candlesticks, then please see our you tube video Spinning Top Candlestick -Technical Analysis Hindi
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