Spinning top candlestick

A spinning top is a single candle with a small real body and wicks on both sides that are longer than the body. The body sits near the middle of the range. The name comes from the toy: a small core with a spike above and a spike below.

It belongs to Japanese candlestick charting. Steve Nison uses the term for any candle with a small real body and notes that the color of the body is not important.

During the period buyers pushed price up and were rejected, and sellers pushed price down and were rejected. The close ended near the open. The market did a lot of travelling and went nowhere.

What that means depends on where the candle appears. After a long advance it shows that buyers no longer move price the way they did. After a long decline it shows the same about sellers. Inside a sideways range a spinning top is normal and says nothing new.

If the body sits at the top with one long lower wick, the candle is a hammer or a hanging man. If it sits at the bottom with one long upper wick, it is a shooting star or an inverted hammer.

• Body – small, usually less than a third of the whole range of the candle.
• Position – the body is near the middle of the range, not at the top or the bottom.
• Wicks – an upper and a lower wick, each longer than the body and of roughly similar length.
• Color – either. A green and a red spinning top are read the same way.
• Context – it matters after a clear move and at a level: support or resistance, a previous high or low.

Both candles show indecision, and the difference is the size of the body. A doji opens and closes at the same price or almost the same price, so its body is a line. A spinning top has a small but visible body.

A doji is the stricter and less common candle and is usually read as the stronger sign of a stall. A spinning top with very long wicks is sometimes called a high wave candle; with almost no body it becomes a long-legged doji. In practice traders treat the three the same way: a pause that needs the next candle to resolve it.

A spinning top as the middle candle of three is also the star of a morning star or an evening star. In Replay mode on Charts you can step through history one candle at a time and see which way spinning tops resolved on your market.

• Mark the high and the low of the spinning top.
• Reversal – after an advance, a close below the low of the spinning top is read as a turn down. After a decline, a close above its high is read as a turn up.
• Continuation – a close beyond the spinning top in the direction of the prior trend means the pause is over and the trend goes on.
• Entry – on the confirming close or on a break of the high or the low.
• Stop – beyond the opposite end of the spinning top.
• Target – the nearest level in the direction of the break, or a fixed multiple of the risk.

• Trading the candle itself – it has no direction until the next candle gives one.
• Reading every small candle as a signal – inside a range spinning tops appear all the time.
• Calling it a reversal pattern – it is a sign of indecision. The reversal or the continuation comes from what follows.
• Ignoring the size – a tiny spinning top in a quiet market means little. One with a wide range after a strong move means more.
• Placing the stop inside the candle – the range of the spinning top is the area both sides already tested.