Spinning Top Candle is a popular candlestick pattern because it hints at a future trend reversal. This pattern is different from other Japanese candlestick patterns because they involve indecision and indecision in the market. Through this candlestick pattern, investors can also partly understand the psychology of buyers and sellers. Let’s join Forex Trading in a detailed technical analysis of spinning top candles right now.
Details about Spinning Top Candle in technical analysis
Currently, in the investment market, there are many types of tools as well as model types of Japanese candlesticks. But the Spinning Top candlestick pattern is currently receiving a lot of attention from traders. Because this is the only candle that signals hesitation, helping investors analyze the psychology of buyers and sellers.
What is the concept of Spinning Top Candle?
The Spinning Top Candle is a neutral candle that will appear in both bullish and bearish markets. They have small bodies and the length of the shadow above will be longer than the body and tail of the candle above. The lower part of the candlestick will be approximately the same and create an appearance very similar to a spinning top.
When the Spinning Top candlestick appears, it shows that the market is currently under control and balanced between buyers and sellers. However, the business signals of this model are not clear. Investors should not trade at this time because there is not enough accurate evidence.
Instructions for identifying Japanese Spinning Top candles
The candle body of the Japanese Spinning Top candle is quite small. Investors can see that the opening price and closing price are quite close to each other. In addition, the opening and closing price points are close to each other so the color of the candlestick is not important. It can be a green candle or a red candle.
The upper shadow of the candle connects the body to the high point of the day. In the case of a green candle, the closing price and the high price are linked together. The lower shadow is the connection of the body to the low point of the day. If it is a red candle, the low price and the closing price are linked together. If it is a green Spinning Top Candle, the low price and open price are linked together.
See more: Read candlestick charts: Basic & advanced material
Technical analysis of morning star candles in Forex
The morning star candlestick pattern is a reversal candlestick pattern that occurs at the bottom of a downtrend. Morning Star shows that the downtrend is weakening and creating the basis for a new uptrend. It consists of a candle with a small body and two upper and lower shadows that form the shape of a morning star.
Comparison of Spinning Top Candle and Morning Star candles
The Japanese Spinning Top candlestick and Morning Star candle are both types of candlesticks signaling a trend reversal. The second candle of the morning star candle can be a Spinning Top Candle indicating market indecision. They signal that the market is gradually weakening. If the second candlestick appears GAP, it means that a reversal signal has formed.
The Spinning Top pattern shows investors the indecision and indecision of the market. They are passed through the long upper and lower shadows of the candle. Buyers increased prices sharply and sellers continued to decrease prices. Finally, at the end of the day’s trading session, the price closes near the opening range.
This indecision in the market could be a sign that the trend is weakening and that the market is indecisive. The Spinning Top Candle indicates that the price may reverse after an increase or decrease when it appears above strong support and resistance lines. There are also cases where the Spinning Top signals the current trend with a short sideways period.
Morning Star Japanese candlestick trading method in forex
Investors should also use stop loss and take profit points while trading to minimize any risks whether the market goes up or down. For the morning star pattern, the ideal stop loss and take profit is below the 1st or 2nd candle if the 2nd candle is red.
Specifically, it is below the lowest price on the chart. Investors can take profits from the nearest resistance level, corresponding to an R: R ratio of 1:1 or 1:2. In a long-term uptrend, this ratio can be 1:10.
Compare Spinning Top Candle and Doji candles in Forex
Looking at the shapes of the Japanese Spinning Top and Doji candlesticks, are quite similar. In technical analysis, Doji is a candle that signals indecision in the market. In terms of tools, these two candles have quite similar functions. However, when using them in the market, investors still need to clearly distinguish these two candles.
The Doji candlestick is shaped like a cross because it has a short body and smaller upper and lower shadows. For comparison, the Japanese Spinning Top candlestick has a wider body. Spindle candles and Doji candles occur quite frequently in all timeframes and all cryptocurrencies.
Ultimately, both candlestick patterns depend on the confirmation of the next candle. If the Japanese Spinning Top and Doji candles are followed by a strong movement in the opposite direction of the current trend. It can be safely predicted that a trend reversal is more likely to occur in the future.
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Live example when using spinning top candles in forex
On the price chart, spinning top candlestick patterns are very easy to see. Take a look at the chart below of the spinning top candlestick pattern highlighted in the chart. The left side of the H4 chart is the spinning top candlestick pattern. The price went higher and in retrospect, investors could have bought at that level. Place the stop loss price just below the bottom of the spinning top candle.
Two spinning top candles develop and add to each other to confirm the price increase. At the end of an uptrend, the second spinning top candle will develop. Next is the price reversal. Large candles decrease following Spinning Top Candle patterns and confirm a new reversal. The final appearance of the spinning candlestick occurs after the price drops. This bullish reversal signal appeared at a key support level where the previous candles rallied. Therefore, the end of this spinning candle means the price will increase.
Conclude
The Spinning Top Candle works best when it appears in a valuable area. For example, support and resistance levels or investors can combine with price confirmation indicators. The main purpose of technical analysis is to provide traders with sharp statistics through multiple streams of analysis. However, they are just additional tools. Different patterns and indicators are used to highlight good trading opportunities. To grasp information about forex, follow Forex Trading regularly.
FAQs
What steps do I need to take to trade with spinning top candles?
The first is to determine the entry point. Next, investors can combine it with other additional indicators.
What does the spinning top candlestick pattern mean in forex?
Spinning candles show investors indecision in the market. This is also shown through the ambiguity between buyers and sellers.
Compare the structure of spinning top candles and Highwave candles
A Highwave candle is a candle with a large body as well as a long candle shadow. When this candle appears, it signals that the market is very chaotic
