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 have a small body with long upper & lower shadows. These spinning top are referred to by this name of spinning top because they are similar to spinning tops on a match-stick.

The upper & lower shadows of the spinning top are longer than the body. The example explained and illustrated below illustrates the spinning top pattern. You can look for pattern setup on your MT4 Software 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 isn't very important, this formation show the indecision between the buyers & sellers in the market. When these stock indices setups appear at the top of a market trend or at the bottom of the trend it may signify that the trend is coming to an end and it may soon reverse & start going the other direction. However, it is best to wait for confirmation signal that direction of a trend has reversed before taking the signal from the chart formation.

Candle Reversal Patterns Formations on Charts

At the top of an upward trend a black/red spinning top illustrates that a reversal is more likely than when colour 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 setup that forms after the spinning tops closes below the neckline for a downward trend reversal confirmation, & closes above the neck-line for a reversal signal setup in a downward trend.

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 Downwards Trend - The open of the previous candlestick that was drawn just before the spinning top

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

Spinning Top Pattern on a Trading Chart

Colour 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 set-ups that form on charts.

following examples show various patterns of the doji candle:

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

Shown Below is example image of the Long Legged

• Doji pattern

Cross Doji Indices Trading Candle

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

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

• Cross Doji Candlestick 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 setup pops up at market turning points and 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 market this is because at the top of the bulls were in control, at the bottom the sellers were in control but none of them could gain control and at the close of the 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 0 pips or just a min range of 1 to 3 pips. Reading these charts patterns require very small pip movement between the opening price and closing price.

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