Posted in Finance, Accounting and Economics Terms, Total Reads: 268
Definition: Spinning Top
Spinning Top is a type of Japanese Candlestick pattern used in technical analysis of an asset. The pattern consists of a short body in the middle of two long wicks. The real body is small even when the price movement throughout the trading day is of a wide range.
A spinning top indicates a situation where the markets have price have reached close to the position it opened during a certain time interval. Therefore the price remains relatively unchanged. In such a situation there is no gain for either the buyer or the seller. Due to this lack of movement in the price of the assets it becomes difficult for the analysts to form a trend about that particular asset. The upper and lower wicks indicate that at different times during the interval that is being considered, both buyers and sellers had upper hand in the market fluctuations.
If a spinning top pattern is formed after a long sustained uptrend, it means that the investors are losing interest in the asset and there may be a reversal in the pattern. On the other hand, if the spinning top is formed after a downtrend, it means that the asset prices may see a rise because of the loss of interest by the sellers.