Independent Forex Trading

Spinning Top Candlestick

The spinning top candlestick pattern represents a possible turning point in market direction. Therefore, the spinning top becomes increasingly relevant when it appears in an established trend. The spinning top is composed of a small body with small upper and lower shadows.

spinning-top-candlestick

Spinning Top Candlestick Analysis

Similar to the doji, the spinning top candlestick pattern signals a possible reversal in trend. For example, when a spinning top appears in an established uptrend – a reversal to the downside may be approaching. Conversely, when a spinning top appears in an established downtrend – there may soon be a reversal to the upside.

Confirmation

The spinning top candlestick pattern becomes increasingly relevant when the following occur:

  • The spinning top is true to form with a small body and an virtually equal upper and lower shadows.
  • It is preceded by a strong trend.
  • Confirmation candles are used to confirm the reversal.
  • Overbought or oversold indicators confirm a change in market direction.

Forex Trading Ideas

The spinning top may be traded alone, or with a combination of signals and/or indicators. For example:

  • Step 1 – Wait for a spinning top to appear during an established trend.
  • Step 2 - Confirm the trend reversal with at least one confirmation candle.
  • Step 3 – Further confirm overbought or oversold conditions using the RSI – Relative Strength Index.*
  • Once conditions 1 – 3 are met place an entry order.

* Additional confirmation ideas – confirm the doji formation when it appears outside of the Bollinger Band or when the Stochastic Oscillator signals oversold or overbought conditions.

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Customization

By adding additional confirmation signals and indicators the evening star candlestick pattern has the potential to become increasingly accurate in predicting a trend reversal. FxSpyder provides integrated customization tools for hands free trade automation using the JavaScript Object Model. Full details are included in the Help Section of the FxSpyder trading application.

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