How Can Spinning Tops Candlesticks and Doji Patterns on Stock Index Charts Be Traded
Reversal Spinning Tops Stock Index 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 illustrated below shows the spinning tops pattern. You can look for the pattern in your MetaTrader 4 Stock Indices Platform charts. The example illustrated below shows a screenshot to help traders when it comes to learning and understanding these formations.
How to read candlestick stock indices 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 stock index trading market. When these stock indices chart patterns appear at the top of a stock indices trend or at the bottom of the stock indices trend it might signal that the stock indices 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 stock indices trend has reversed before trading the signal from this chart formation.
Candlestick Reversal Patterns Formations on Trading Charts
At the top of an upward stock indices 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 Stock Indices Trading downward stock indices trend a white/blue spinning top shows that a reversal is more likely than when the color is black/red.
This reversal stock indices signal is confirmed when the next candlestick pattern that forms after the spinning tops closes below the neckline for a downward stock indices trend reversal stock indices signal confirmation, and closes above the neckline for a reversal stock indices signal in a downward trend.
The neckline is:
- For an Upward Stock Indices Trading Trend - The open of the previous candlestick that was drawn just before the spinning top.
- For a Downward Stock Indices Trading Trend - The open of the previous candlestick that was drawn 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 stock index price moved above the neckline the reversal stock indices signal given by the spinning top candlestick was confirmed and this was a good point to exit the short sell stock indices trade.
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.
Doji Candlesticks Pattern
This is a pattern with the same opening and closing stock index 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 stock index price at the middle. When the Long-legged doji appears on a Stock Indices Trading chart it indicates indecision between stock index traders, the buyer and the sellers.
Below is an example screenshot image of the Long Legged
- Doji stock indices chart pattern
Cross doji has a long lower shadow and a short upper shadow and the open and close of the day is the same.
This stock indices pattern appears at market turning points and warns of a possible stock indices trend reversal in the Stock Indices. Below is as example of this chart formation
- 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 stock indices pattern appears at market turning points and warns of a possible stock indices trend reversal in the Stock Indices. Below is an example
- Inverted Cross doji
Technical Analysis - All doji candlesticks pattern show indecision in the stock indices 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 stock indices market the stock index price closed unchanged at the same stock index price as the opening stock index price. This doji shows that the overall stock index 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 stock index price and closing stock index price.