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Spinning Tops Candlesticks Pattern and Dojis Candlestick Patterns

Spinning tops candlesticks pattern have a small body with long upper and lower shadows. These spinning tops are referred to by this name because they are similar to spinning tops on a matchstick.

 

The upper and lower shadows of the spinning tops are longer than the body. The example below shows the spinning tops pattern. You can look for the pattern in your MetaTrader 4 Platform charts. The example below shows a screenshot to help traders when it comes to learning and understanding these formations.

Spinning Tops Candlesticks Chart Pattern

How to read candlestick charts - Spinning Tops

 

The color of the spinning tops candlestick is not very important, this formation show the indecision between the buyers and sellers in the Forex market. When these chart patterns 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 might soon reverse and start going the other direction. However, it is best to wait for confirmation signals that the direction of a currency has reversed before trading the signal from this chart formation.

 

Candlestick Reversal Patterns Formations on Trading Charts

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

 

At the bottom of a Forex 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 downward trend.

 

The neckline is:

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

 

Below is an example of this Japanese charting techniques where this pattern has formed and how to trade it. On the trading chart below when the 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 Tops Candlestick Chart Pattern on a Forex Chart

Spinning Tops Pattern on a Chart


The 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.

 

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Doji Candlesticks Pattern

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

 

The following examples show various patterns of the doji candlestick:

Long-legged doji candlestick has long upper and lower shadows with the opening and closing price at the middle. When the Long-legged doji appears on a Forex chart it indicates indecision between currency traders, the buyer and the sellers.

 

Below is an example screenshot image of the Long Legged

Doji Candlesticks Chart pattern

  • Doji chart pattern

 

 

Cross Doji

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 appears at market turning points and warns of a possible trend reversal in the Forex. Below is as example of this chart formation

Cross Doji Candlesticks

  • Cross Doji Pattern


 

Inverted Cross Doji

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

 

This reversal pattern appears at market turning points and warns of a possible trend reversal in the Forex. Below is an example

inverted Cross Doji Candlesticks chart pattern

  • Inverted Cross doji

 

Technical Analysis - All doji candlesticks pattern show indecision in the foreign exchange 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 market the currency price closed unchanged at the same price as the opening 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 and closing price.

Market Sentiment: Did you know that traders and market participants have been buying US Dollars because USD is the best currency to hold when there is a recession – this is because the dollar is held as the reserve currency by most central banks and during recession most traders also prefer to hold this currency, this is why USD is known as a safe haven currency. But now the market sentiment has changed and all the economies are on their way to recovery and most have even returned to economic growth based on the economic reports coming from these countries.

During times of economic growth traders prefer to sell the dollars they had bought and start buying higher yielding currencies. These higher yielding currencies include EURO and Great Britain Pound. This is why the Euro is starting to appreciate against the USD. The EURUSD is trending upwards; Crude Oil Prices have also started to move back up because demand of oil is growing because of the global economic growth, Gold is also in an upward trend because during economic growth the prices of commodities also go up because there is increase in their demand.

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