This candlestick has a tiny red body with upper and lower shadows that have a greater length than the body. It is accepted as a type of Doji, and will act as a Doji when it appears.
Recognition Criteria
1. The body of the candlestick is red and very small.
2. The upper and lower shadows are longer than the body.
Candlestick Requirements and Flexibility
The red body of the candlestick should be very small. The lengths of the shadows should be greater than the length of the body.
Trader’s Behavior
The market moves higher and then sharply lower, or vice versa. It then closes below the opening price creating a tiny red body. This represents complete indecision between the bulls and the bears. The actual length of the shadows is not important. The small body relative to the shadows is what makes the spinning top.
If a Red Spinning Top is observed after a long rally or long white candlestick, this implies weakness among the bulls and it is a warning of a potential change or an interruption in the trend.
If a Red Spinning Top is observed after a long decline or a long red candlestick, this implies weakness among the bears and it is a warning of a potential change or an interruption in the trend.
Like most other single candlestick patterns, the Red Spinning Top has low reliability. It reflects only one day’s trading and can be interpreted both as a continuation or a reversal pattern. This pattern must be used with other candlesticks to confirm a trend.
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