UK Accounting Glossary
A spinning top is a type of candlestick on a candlestick chart that signals indecision about the direction of a security. A short candle body, either white or black, and upper and lower shadows that are longer than the body characterize a spinning top. The long shadows of a spinning top reveal that the price of a security traded within a wide range, but neither buyers nor sellers were able to sustain a price direction. In general, traders tend to view the spinning top within its relationship to the overall trend. For instance, a white spinning top or black spinning top that appears after a long uptrend suggests buying pressure is weakening and a reversal to the downside may soon occur. Similarly, a white spinning top or black spinning top that appears after a long downtrend suggests selling pressure is weakening and a reversal to the upside may soon occur. However, most traders do not consider the spinning top to be a highly reliable signal.
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This glossary post was last updated: 5th February 2020.