What is a Spinning Top?

Spinning top candles also have a small real body where in opening price and closing price are almost equal. Also, the upper and lower shadow is almost equal. Since the open and close price is so close to each other, color of the candle does not matter. Presence of the upper shadow reflects that bulls tried to take the market higher but they were not successful and in the same way presence of the lower shadow reflects that bears tried to take the market lower but they were unsuccessful. Therefore it can be clearly stated that neither bulls nor bears could influence the market as it is indicated with the small body. Thus Spinning tops are indicative of a indecisiveness and uncertainty about the future direction in the market. But it is still helpful to the analysts to decide on their position as formation of spinning top could mean trend may continue or reverse.



In the LT chart above, we can observe that prior to the formation of spinning top there is a uptrend and after the formation, there is continuation in the uptrend. So it indicates that, bulls are gathering their strength in order to continue their trend and that can be found out after identification of spinning top.


The other possibility as shown in the above reliance chart is that, prior to the formation of the spinning top there is an healthy uptrend and after the formation of spinning top there is reversal in trend. 


In the above HDFC bank chart, spinning top is formed at the end of downtrend and post that there is reversal in trend.

To Summarize:

1. Spinning top conveys indecisiveness in the market where neither bulls nor bears were able to establish their position in the market. In such cases it is advisable to not to take any new position.
2. In case there is uptrend prior to the formation of spinning top , either of the following things can happen:
     a. Bulls could be strengthening their position by consolidation to continue their uptrend, or
     b. Bulls lose their strength by giving their position to bears resulting in reversal of trend,
Probability of these above two options are equal.

3. In case there is downtrend prior to the formation of spinning top, either of the following things can happen:
    a. Bears could be strengthening their position by consolidation to go further down, or
    b. Bears lose their control to bulls which results in reversal of trend,
Probability of these above two options are equal











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