How Can Spinning Tops Candlesticks and Doji Patterns on Stock Index Charts Be Traded?
Reversal Spinning Tops Candle Patterns
Spinning tops candlesticks pattern have a small body with long upper & lower shadows. These spinning top are referred to by this name of spinning tops because they are similar to a 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 top pattern. You can look for the pattern in your MT4 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 charts - Spinning Tops
Color of the spinning top candle 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 may signal that the trend is coming to an end & it may soon reverse & start going the other direction. However, it is best to wait for confirmation trading signals that the direction of a stock indices trend has reversed before trading the trading 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 tops shows that a reversal is more likely than when color of the candle is white/blue.
At the bottom of a Stock Indices Trading downwards 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 signal confirmation, and closes above the neckline for a reversal stock indices signal in a downwards trend.
The neckline is:
- For an Upwards Stock Indices Trend - The open of the previous candle that was drawn just before the spinning top.
- For a Downwards Stock Indices Trend - The open of the previous candle 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 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 index trade transaction.
Spinning Tops Pattern on a Chart
Color of the spinning top 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 the same opening & closing stock index price. There are various types of doji candlestick patterns that form on charts.
following examples explain various patterns of the doji candle:
Long-legged doji candlestick has long upper & lower shadows with opening and closing stock index price at the middle. When the Long legged doji pops up on a Stock Indices chart it indicates indecision between stock index traders, the buyer and the sellers.
Below is an example image image of the Long Legged
- Doji stock indices chart pattern
Cross Doji Indices Trading Candlestick
Cross doji has a long lower shadow and a short upper shadow & the open and close of the day is the same.
This stock indices pattern pops up at market turning points & warns of a possible stock indices trend reversal in the Stock Indices. Shown Below is as example of this chart formation
- Cross Doji Pattern
Inverted Cross Doji Candle Pattern
Inverted cross doji candles have a long upper shadow and a short lower shadow & the open and close is the same.
This reversal stock indices pattern pops up at market turning points & warns of a possible stock indices trend reversal in the Stock Indices. Shown Below is an example
- Inverted Cross doji
Technical Analysis in Indices Trading - All doji candles 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 & closing stock index price.
