How Can Spinning Tops Candle-sticks and Doji Patterns on Stock Indices Charts Be Traded?

Spinning Tops Consolidation Indices Candlesticks Pattern

Spinning tops candle-sticks pattern setup have a small body with long upper and lower shadows. These spinning top are referred to by this name of spinning top because they are similar to spinning tops on a matchstick.

The upper & lower shadows of the spinning tops are longer than the body. The example explained and illustrated below shows the spinning top pattern. You can look for pattern setup on your Meta Trader 4 Trading Platform charts. The examples illustrated below shows a screen-shot to help traders when it comes to learning and understanding these formations.

How to read candle charts - Spinning Tops

Color of the spinning top candle is not very important, this formation show the indecision between the buyers & sellers in the trading market. When these stock indices setups appear at the top of a trend or at the bottom of the trend it might signify that the trend is coming to an end and it may soon reverse & start going the other direction. However, it's best to wait for confirmation signals that the direction of a trend has reversed before trading the signal from the chart formation.

Candle Reversal Patterns Formations on Charts

At the top of an upwards trend a black/red spinning top shows that a reversal is more likely than when color of the candle is white/blue.

At the bottom of a Indices downward trend a white/blue spinning top shows that a reversal is more likely than when the color is black/red.

This reversal signal is confirmed when the next candlestick pattern that forms after the spinning tops closes below the neckline for a downward trend reversal signal confirmation, and closes above the neckline for a reversal signal in a downwards trend.

The neckline is:

• For an Upward Indices Trend - The open of the previous candle that was drawn just before the spinning top.
• For a Downwards Indices Trend - The open of the previous candle that was drawn just before the spinning top

Shown Below is example of this Japanese charting techniques where this pattern has formed and how to trade it. On the chart below when the trading price moved above the neckline the reversal signal given by the spinning top candlestick was confirmed and this was a good point to exit the short sell trade.

Spinning Top Pattern on a Chart

Color of the spinning tops formed is blue therefore meaning that a reversal was more likely as opposed to if the color had been red.

Doji Candles Pattern

This is a pattern with same opening and closing price. There are various types of doji candle stick setups that form on charts.

following examples show various patterns of the doji candle:

Long-legged doji candle has long upper and lower shadows with opening and closing price at the mid. When the Long-legged doji appears on a Indices chart it shows indecision between stock traders, buyer and the sellers.

Shown Below is example image image of the Long Legged

• Doji chart pattern

Cross Doji Indices Trading Candle

Cross doji has a long lower shadow and a short upper shadow and the open & close of the day is the same.

This pattern pops up at market turning points & warns of a possible trend reversal in the Indices. Below is as example of this chart formation

• Cross Doji Pattern

Inverted Cross Doji Stock Indices Candle-stick Setup

Inverted cross doji candlesticks have a long upper shadow and a short lower shadow and the open & close is the same.

This reversal pattern pops up at market turning points & warns of a possible trend reversal in the Indices. Below is an example

• Inverted Cross doji

Analysis in Indices Trading - All doji candles pattern show indecision in the trading market this is because at the top of the buyers were in control, at the bottom the sellers were in control but none of them could gain control and at the close of the trading market the price closed unchanged at same price as the opening trading price. This doji shows that the overall price movement for that day was zero pips or just a minimum range of 1-3 pips. Reading these charts patterns require very small pip movement between the opening price & closing price.