Spinning tops in an uptrend
The chart below can help us make an inference on the implications of a spinning top. Whether in an uptrend or a downtrend, this pattern will appear similar — but there is a slight distinction we should observe.
An observable market trend implies that bulls have been dominant in recent trading sessions. Nevertheless, the recent presence of spinning tops presents a tricky situation.
In evaluating the information above, it is important to consider the implications and how your company can gain a competitive edge in today’s market.
Given that, what course of action do you take? Both scenarios have the same likelihood of occurring, so how do you position yourself? In this case, it is best to get ready for both eventualities!
Assuming you had purchased the stock prior to the surge, this could be your opportunity to gain some returns. Don’t cash in on all of them though; if you have 500 shares, consider profiting from half of them or 250 shares. After taking this action, two scenarios arise:
The position you adopt can be an effective tool to help you achieve both desired outcomes.
This chart illustrates an uptrend, marked by spinning tops, which has generated an impressive rally. By investing 50%, you can take advantage of this boom.
In conclusion, the spinning top candle suggests a lack of clarity and reliability in the market with the potential for a move in either direction. Until more clarity is achieved, traders ought to exercise caution and maintain smaller position sizes.
Doji and spinning tops are alike except that they both lack a real body; their opening and closing prices being equivalent. They provide a valuable indication of the market trends and are a significant candlestick pattern.
The classic definition of a Doji is one with a nominal real body, where the open and close prices are near indistinguishable. The length of the upper and lower wicks are not restricted.
Despite its thin body, the candle can be seen as a Doji if it adheres to the second rule of ‘flexibility, verification, and quantification’.
It’s clear that the hue of the candle is inconsequential when discussing a real thin body. What stands out, in this case, is simply how near to one another the opening and closing prices were.
Dojis and spinning tops have more or less the same implications. They are both indicative of indecision in the market and often appear clustered together.