How Can Spinning Tops Candlesticks and Doji Patterns Be Utilized in Stock Index Chart Trading?

Spinning Tops Consolidation Indices Candlesticks Pattern

Spinning top candles are characterized by their small body and long upper and lower shadows. The name “spinning top” derives from their resemblance to the spinning tops found on matchsticks.

The upper and lower lines on the spinning top image are longer compared to the main body. The picture shown below gives a clear view of what the spinning top looks like. You're able to search for this pattern on the charts of your MT4 Platform. The examples displayed below include a screenshot for the traders to assist in studying and learning about these patterns.

How to read candlestick charts - Spinning Tops

The color of the spinning top candlestick is not very important: this look shows that the buyers (bulls) and sellers (bears) in the market are not sure. When these index looks show up at the top or bottom of a market trend, it could mean the trend is ending and might soon change and start going the other way. But, it's best to wait for a signal to make sure that a stock index has changed direction before using the signal from the chart look.

Candle Reversal Patterns Formations on Charts

A black/red spinning top at the peak of an upward trend suggests that a reversal is more probable compared to when the candlestick is in white/blue.

At the end of an indices downtrend, a white or blue spinning top signals reversal. Black or red weakens it.

You get a reversal signal when the next candle after a spinning tops candlestick closes below the neckline for a downward reversal, or above the neckline for an upward reversal. That's your confirmation.

The neck-line is:

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

An illustration of this Japanese charting technique, demonstrating the formation and subsequent trading signal, is presented below. On the chart shown, once the price moved beyond the neckline, the reversal signal generated by the spinning top candle was confirmed, signifying an opportune moment to close a short sell position profitably.

Spinning Top Pattern on a Trade Chart

The spinning tops show in blue. This means a reversal is more likely than if they appeared red.

Doji Candles Pattern

A pattern is formed when the opening and closing prices are identical. Various types of Doji candlestick setups appear on charts.

following examples show various patterns of the doji candle:

A long-legged doji candlestick features extended upper and lower shadows, with the opening and closing prices situated near the center. Its presence on an Indices chart signifies a state of indecision between stock market buyers and sellers (bears).

Displayed Below is illustration image of the Long Legged

• Doji pattern

Cross Doji Indices Trade Candle

A cross doji has a big lower shadow & a small upper shadow, plus the opening and close price is the same.

This pattern arrangement appears at market turning points and signals a potential trend direction reversal in the indexes. The following is an illustration of this chart setup configuration

• Cross Doji Candle Pattern

Inverted Cross Doji Stock Index Candle-stick Setup

Inverted cross doji candlesticks feature a lengthy upper shadow, a short lower shadow, and identical opening and closing prices.

This reversal setup tends to show up when the market's about to turn, giving a heads-up that the trend could be about to reverse. Here's an example.

• Inverted Cross doji

Analyzing indices trade patterns involves observing doji candlesticks. These patterns reflect indecision within the market - showing bulls controlling at the highs, sellers ruling at the lows, yet neither dominating as prices often close at their opening levels. This doji shows that the overall price movement for that day was 0 pips or just a min range of 1 to 3 pips. Reading these charts patterns require very small pip(point) movement between the opening price and closing price.

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