The spinning top candlestick pattern is a neutral formation that signals market indecision. It forms when the candle has a small body with long upper and lower shadows, showing that buyers and sellers were active but neither side gained control. Trading the spinning top pattern effectively requires context, as the candle alone doesn’t guarantee direction.

First, analyse the broader trend. If a spinning top appears after a strong uptrend, it could indicate weakening momentum or a potential reversal. Conversely, in a downtrend, it may suggest that selling pressure is losing strength. In sideways markets, the pattern often reinforces consolidation. Always confirm with other technical indicators such as moving averages, RSI, or MACD before taking action.

One way to trade the spinning top is to wait for the next candle to provide confirmation. A bullish candle following the spinning top can be an entry signal to go long, while a bearish candle may suggest short opportunities. Placing stop-loss orders just below the low of the pattern for long trades or above the high for short trades helps manage risk.

Patience is key. Rather than reacting instantly, use the spinning top as a warning sign that the market may shift. By combining it with trend analysis and confirmation signals, traders can use this pattern to spot early changes in market sentiment.