The Spinning Top strategy is a versatile candlestick trading method used to identify potential reversals, pauses, or continuation setups in the market. Spinning Tops are neutral candlesticks that reflect indecision between buyers and sellers, often appearing at turning points or consolidation zones. While not as aggressive as other candlestick signals, when used in the right context, this pattern can provide traders with valuable insight and precise entry opportunities.

This guide walks you through how to trade the Spinning Top candlestick pattern with confidence, using market structure, confirmation, and technical confluence.

What Is a Spinning Top Candlestick?

A Spinning Top is a candlestick with:

• A small real body in the middle of the range
• Long upper and lower wicks, indicating rejection on both sides
• Occurs after a sharp move or within a tight range

It represents indecision or balance of power between bulls and bears.

Spinning Tops are most effective when they occur:

• After strong trends (potential reversal)
• At major support or resistance (possible exhaustion)
• Inside consolidation zones (possible continuation)

Why the Spinning Top Strategy Matters

The Spinning Top alerts traders to a slowdown in momentum. It doesn’t confirm direction alone but acts as a warning signal that the current move may be weakening.

When followed by a breakout or strong confirmation candle, it can provide low-risk entries with well-defined stop-loss placement.

How to Trade the Spinning Top Strategy

The Spinning Top strategy relies on combining candlestick signals with technical levels, confirmation, and price context. Here’s a step-by-step approach:

1. Identify a Clear Spinning Top

Look for:

• A small-bodied candle in the middle of a wide range
• Equal or nearly equal wicks on both sides
• Appears after a strong directional move or at a key level

Note: Avoid trading random Spinning Tops in the middle of ranges or chop. Context is key.

2. Analyse Market Context

The reliability of the pattern increases significantly when:

• It forms at a major support or resistance zone
• It appears after a strong trend, suggesting exhaustion
• It coincides with a trendline, Fibonacci level, or round number

Examples:

• A Spinning Top forms at the 61.8% Fibonacci retracement of an uptrend → potential reversal.
• A Spinning Top appears at a prior swing high → watch for bearish confirmation.

3. Wait for Confirmation

Spinning Tops do not predict direction alone. You must wait for a confirmation candle:

• Bullish confirmation: A strong bullish candle closes above the Spinning Top’s high.
• Bearish confirmation: A strong bearish candle closes below the Spinning Top’s low.

Entry Options:

• Enter on the close of the confirmation candle.
• More aggressive: Enter at the break of the Spinning Top high/low with a stop-loss beyond the opposite wick.

4. Define Stop-Loss and Take-Profit

Stop-Loss:

• Just beyond the Spinning Top’s wick
• Or just outside a nearby technical zone (e.g. support/resistance)

Take-Profit Targets:

• Nearest swing high or low
• Fibonacci extension levels (127.2%, 161.8%)
• Risk-reward of at least 2:1 recommended

5. Add Technical Confluence for Precision

Increase probability by combining with:

• RSI divergence: Signals weakening momentum
• MACD crossovers: Confirms change in trend
• Volume analysis: High volume on Spinning Top or confirmation candle strengthens the signal
• Trendlines or moving averages: Rejections from these areas add validity

6. Best Timeframes and Assets

• Timeframes: 1H, 4H, Daily for clearer signals
• Markets: Forex, indices, commodities, crypto

Avoid:

• Illiquid markets with irregular candles
• Small timeframes where noise dominates

Spinning Top Strategy Summary Table

Condition	Bullish Setup	Bearish Setup
Trend direction	After downtrend	After uptrend
Candlestick shape	Small body, long wicks	Small body, long wicks
Confirmation needed	Bullish candle above high	Bearish candle below low
Confluence	Support, MA, RSI, Volume	Resistance, MA, RSI, Volume
Entry	Breakout or close of confirmation	Breakout or close of confirmation
Stop-loss	Below wick	Above wick
Risk/reward	Minimum 2:1	Minimum 2:1

Conclusion: Trading the Spinning Top Strategy with Precision

The Spinning Top strategy offers a low-risk, high-reward way to anticipate market turns or trend pauses when used in the right context. While not a standalone reversal signal, this candlestick’s real power comes from pairing it with confirmation and confluence. Used wisely, it helps traders reduce false signals and time entries with greater accuracy.

To master the use of candlestick patterns like the Spinning Top and integrate them into a full technical trading system, check out our expert-led Trading Courses at Traders MBA and sharpen your edge in any market condition.