Spinning Top, High Wave, and Short Line: Spotting and Trading Candles of Indecision

What Is a Spinning Top?

A spinning top is a single candle with a small body and wicks on both sides. During the period the price ran clearly up and down, but closed near its open. The candle shows indecision: buyers and sellers were active, but neither side gained the upper hand.

The colour of the small body plays a minor role in the textbook. What matters is where the candle stands: after a longer rise or decline, a spinning top shows that the trend is losing strength. In a sideways phase, by contrast, it says little, because no side is leading there anyway.

Two variants belong to the same family: the high wave with particularly long wicks and the short line, an overall small candle with a short body and short wicks. FinScans lists all three as triggers, each in a bullish and a bearish form.

How Do You Identify a Spinning Top?

A spinning top is identified by three features: a small but visible body, wicks above and below that are at least as long as the body, and a range roughly as large as that of the preceding candles. How small the body must be is defined slightly differently by each source; as a rule of thumb, at most a third of the range.

• Body: small, but not a line. If it is barely visible, it is a doji.
• Wicks: clearly present above and below, each about as long as the body or longer. If one wick is missing, it is more likely a hammer or a shooting star.
• Size: the whole candle is not conspicuously small. A candle with a small body and short wicks that is much smaller than its neighbours is a short line.
• Position: the spinning top is meaningful after a trend or at an important zone, not in the middle of a sideways phase.

Rules of thumb such as "a third of the range" depend on the market and the timeframe. On very quiet pairs small bodies are more common than on cryptocurrencies with large swings. Always compare the candle with its neighbours.

What Lies Behind the Spinning Top?

Behind the spinning top is a contest without a winner. First one side drives the price in its direction, then the other side pulls it back, and in the end the period closes near the open. Both wicks show prices that the market tested and rejected again.

After a rise this means: buyers were still able to push the price above the last high, but not to hold it there, and sellers pressed it clearly lower in between. The ease with which the trend ran before is gone. Whether this turns into a reversal is decided only by the next candle. After a decline the same applies in mirror image.

What Types Exist?

FinScans knows three forms, each with a green (bullish) and a red (bearish) candle. In addition there is the position on the chart, which decides the meaning for all three.

Spinning Top

The classic spinning top has a small body and wicks above and below that are about as long as the body or longer. The range roughly matches that of the preceding candles. It is the most common form of the family and appears on all timeframes.

High Wave

The high wave is a spinning top with particularly long wicks: both wicks are several times as long as the very small body, and the range is usually larger than that of the preceding candles. The price swung far up and far down and yet stayed near the open. This shows greater uncertainty than the ordinary spinning top. After a long trend the textbook treats it as a clearer warning, but in turbulent phases it is also just a sign of large swings.

Short Line

The short line is a small candle with a short body and short wicks whose entire range is clearly smaller than that of the preceding candles. It shows a quiet period in which little happened, often before important releases or in times of low liquidity. On its own it is the weakest sign of the family. The long counterpart, the long line, belongs to the candles on the page about the marubozu.

The Spinning Top and Its Place in the Trend

The same candle means something different depending on where it stands on the chart. After a rise it warns that buyers are fading, after a decline that sellers are fading. In a sideways market it is common and usually meaningless. Within a strong trend, for example in a short pause, it often confirms only the pause and not the reversal.

When Does a Spinning Top Confirm, and When Does It Not?

A spinning top is confirmed when the next candle closes beyond its high or low, against the previous trend. After a decline that is a close above the high, after a rise a close below the low. Until then the candle is only a warning. If, instead, the price closes beyond the candle in the direction of the old trend, the indecision has been resolved in favour of the trend.

On the chart the price rises over many candles, then a red high wave forms: open 106.00, high 106.75, low 105.20, close 105.80. The body measures only 0.20 and thus 13% of the range of 1.55; the upper wick of 0.75 is almost four times, the lower wick of 0.60 three times as long as the body. The next candle closes at 106.30, the one after at 106.95 and thus above the high of the high wave at 106.75. With that the warning is settled, and the rise continues to the close of 109.05 at the right edge.

How do you spot the failure early? The candle after the high wave does not close below its low but higher; the sellers do not follow through. Anyone who bet on a reversal exits at the latest on the close above the high. The stop above the high of the pattern candle limits the loss for exactly this case.

Example of Entry, Stop, and Target

The following example shows a spinning top at the end of a downtrend, confirmed by the next candle. It is a teaching example, not a recommendation for a particular market.

The price falls from the swing high at 106.60 over almost twenty candles. Then a green spinning top forms: open 101.30, high 102.00, low 100.75, close 101.55. The body of 0.25 makes up 20% of the range of 1.25, the upper wick measures 0.45, the lower 0.55; both are therefore about twice as long as the body. At 1.5 times the usual range before it, the range is easy to see.

The next candle closes at 102.40 above the high of the spinning top and confirms the turn. The entry is this close at 102.40, the stop sits just below the low of the pattern candle at 100.65, so the risk is 1.75 points. The target is the swing high at 106.60 where the decline began; the distance is 4.20 points. The reward-to-risk ratio is about 2.4 to 1, and the price reaches the target ten candles after the entry.

How Do You Use the Spinning Top Across Multiple Timeframes?

On short timeframes spinning tops form constantly, because the price often runs back and forth within a few minutes. Only the higher timeframes show whether the indecision occurs at an important place.

If a pair is rising on the 4h and 1d charts while pulling back for a few hours on the 1h chart, a green spinning top on the 1h chart can mark the end of this pullback. It then points in the direction of the main move, and the confirmation by the next candle carries more weight. A red spinning top against the trend of the higher timeframes, by contrast, is often just a pause in the rise. A spinning top on the 1d chart summarises a whole trading day and therefore weighs more than one on the 1h chart. You can see the direction on each of the eight timeframes on the signal page and in the cockpit.

How Do News and Scheduled Events Affect the Spinning Top?

Before important releases, candles often become small because many market participants wait. A short line or spinning top shortly before a rate decision then shows no real indecision about the trend, only the wait for the figure. After the release, by contrast, high waves are frequent: the price first jumps one way, then the other.

So check in the economic calendar whether an important release fell within the time of the candle or is due shortly. The news situation in the cockpit also shows whether the reports on the pair tend to favour one side or the other. A spinning top that formed with a piece of news says more about the news than about the trend.

How Do You Use the Spinning Top in the Four Trading Styles?

In all styles the spinning top is a warning sign, not an entry on its own. How much weight it gets depends on the timeframe, the position, and the confirmation.

The Spinning Top in Scalping

In scalping on the 15m and 30m charts, spinning tops are very common. Many form in quiet phases such as the Asian session, when currency pairs have hardly any direction, and mean little there. They become interesting at a zone that is also visible on the 1h or 4h chart, for example at a daily high or a round number.

Only the confirmation is traded: if the next candle closes beyond the high or low, an entry can follow, with the stop beyond the other end of the pattern candle. Because the candles are small, the stop is also tight, and the spread makes up a noticeable part of the risk. The London and New York opens often bring enough movement for a spinning top to resolve.

Targets are close, at the next zone or a fixed multiple of the risk. Positions are held for minutes to a few hours. In cryptocurrencies there are no session boundaries, but weekends are often thinly traded, and small candles are then particularly common. Around high-impact releases, small candles are mostly just waiting. The time commitment is high; the style suits traders who decide quickly and can wait for the first candle after a release.

The Spinning Top in Day Trading

In day trading on the 1h and 2h charts, a spinning top carries more weight, because one candle already summarises one or two hours of trading. A typical case is a spinning top at the end of a morning rise or after a pullback to a zone on the 4h chart.

The entry follows the close of the next candle beyond the high or low, and the stop sits beyond the other end. The target is the next zone or the swing high or low where the previous move began. Positions are closed before the end of the session, so overnight gaps play no role.

Watch the time of day: a spinning top in the quiet midday period before the New York open often shows only waiting. On the 1h chart spreads are smaller relative to the stop than in scalping, but releases in the calendar remain the most common reason for false signals. The style suits traders who can follow the market attentively for a few hours a day and wait for the confirmation instead of relying on the pattern candle alone.

The Spinning Top in Swing Trading

In swing trading on the 4h and 8h charts, the spinning top often stands at the end of a swing that has lasted several days. Here the candle weighs more than on short timeframes: it summarises several hours, and the confirmation by the next candle can be awaited calmly.

The stop sits beyond the other end of the pattern candle or, with very small candles, beyond the next structure. The target is the swing high or low where the previous swing began, or a zone on the 1d chart. Positions are held for days to a few weeks; overnight financing and weekend gaps are part of it.

The comparison with the 1d chart is important: a spinning top on the 4h chart against the daily trend often shows just a pause. If a central bank meeting falls within the planned holding period, it can make more sense to enter only afterwards. Anyone who sees the candle only in the evening has enough time until the close of the next 4h candle to plan the stop and size. The style suits traders with little time during the day who have the patience to wait for the confirmation.

The Spinning Top in Position Trading

In position trading on the 12h and 1d charts, a spinning top is rarer but weightier. A spinning top on the 1d chart after a rise lasting weeks shows that the market found no direction for an entire day. This can mark the start of a longer pause or a reversal.

Here too, it is traded only with confirmation, often by a candle that clearly leaves the body of the pattern candle behind. The stop is wide, beyond the other end or the next large structure, and the position is correspondingly small. Targets are large zones or earlier turning points, and positions are held for weeks to months.

At this level the news situation counts for more than in short-term trading. A spinning top that coincides with a turn in monetary policy carries more weight than one without a fundamental background. The time commitment is low; the style suits traders who can tolerate swings over several days.

Spinning Top or Doji?

Both candles show indecision; they differ in the size of the body. With the spinning top a small but visible body remains, with the doji almost just a line. For trading this means: a spinning top shows a slight advantage for the side whose colour it carries, the doji a stalemate.

The transition is fluid: a spinning top with a very small body looks almost like a doji. In both cases, what matters is not the exact size of the body but what the next candle does.

What Mistakes Are Common with the Spinning Top?

• Reading every small candle as a signal: spinning tops are everyday events on short timeframes. Without a trend before them and without a zone, they say nothing.
• Entering without confirmation: the pattern candle shows only indecision. Only the close of the next candle shows the direction.
• Overrating the colour: whether the small body is green or red weighs less than the position on the chart and the follow-up candle.
• Overlooking releases: before important releases, small candles are mostly waiting, not indecision about the trend.
• Setting the stop too tight: with a high wave and its long wicks, the other end is far away. The position size has to take that into account, see risk management.
• Confusing a short line with a spinning top: a small candle in a quiet phase says less than a normal-sized spinning top after a trend.

How Spinning Top Triggers Are Named in FinScans Signals

On the signal page, these triggers appear in the trigger table, each with an arrow: ▲ means FinScans counts the trigger on the bullish side, ▼ on the bearish side. Six names belong to this page:

• “Spinning Top Bullish” (▲) and “Spinning Top Bearish” (▼): A spinning top with a green or red candle.
• “High Wave Bullish” (▲) and “High Wave Bearish” (▼): A high wave with a green or red candle.
• “Short Line Bullish” (▲) and “Short Line Bearish” (▼): A small candle with a green or red body.

The suffix follows the colour of the candle: "Bullish" stands on a candle that closes above its open, "Bearish" on one that closes below it. So it says nothing about whether a trend ran before it; you check that on the chart. For any one candle, FinScans names at most one of these: in the last 30 days, no signal contained more than one of them. Spinning tops are far more common in the signals than high waves, and short lines are rare.

The signal page shows no class for candlestick patterns. These triggers almost always appear in signals of their own direction. Such a trigger almost never stands alone: FinScans combines it with the other triggers of the same signal into an overall direction. Whether the signal runs with or against the larger move is shown by the trend across the eight timeframes and the overall assessment.

The following block shows current data on these triggers. The hit rate should always be read relative to the average: if it is above, the trigger has a statistical edge; if it is below, it is better used as a hint than as the sole reason to enter. The rates can vary considerably by trading style, because there is more noise on short timeframes. The distances to target and stop also play a role: a tight stop is hit more often than a wide one, a distant target less often than a near one.

What the Machine Reports, What You Check Yourself

On the signal page, these triggers appear for forex and crypto pairs; their name describes the shape and colour of the candle, not its position in the larger picture. Whether a spinning top offers a viable setup is something you decide yourself in hybrid trading.

• The machine reports, for example, "Spinning Top Bullish" or "High Wave Bearish"; you check on the chart whether a trend ran before it against which the candle could signal a reversal.
• The signal page shows the trigger's arrow; you check whether the next candle closes beyond the high or low.
• The machine provides the trend across eight timeframes; you check whether the candle stands at a zone of the higher chart.
• The data block shows the hit rate so far; you check in the economic calendar whether the candle formed shortly before or after a release.
• The signal page shows target and stop; you measure the distance to beyond the other end of the candle and check whether the reward-to-risk ratio fits your risk management.
• With a short line, you check whether the candle shows only a quiet phase, for example before a release or at the weekend.

Frequently asked questions

Is a Spinning Top Bullish or Bearish?

On its own, neither: it shows indecision. After a decline it can announce a turn upwards, after a rise a turn downwards. At FinScans the name carries the suffix Bullish or Bearish according to the colour of the candle. Only the next candle confirms the direction with a close beyond the high or low.

What Is the Difference Between a Spinning Top and a High Wave?

The high wave is a special form of the spinning top: its body is very small, both wicks are several times as long as the body, and the range is usually larger than that of the preceding candles. It shows greater uncertainty. After a long trend it counts as a clearer warning, but in turbulent phases, for example after news, it is common and less meaningful.

What Is a Short Line?

A short line is a small candle with a short body and short wicks whose range is clearly smaller than that of the preceding candles. It shows a quiet period in which little was traded or the market waited. On its own it says little; it becomes interesting only in connection with the candles before and after it, for example as a pause before a breakout.

How Do You Trade a Spinning Top?

Not the pattern candle itself, but its confirmation. If a spinning top stands at an important zone after a trend, you wait for the next candle to close beyond the high or low. The stop sits beyond the other end of the pattern candle, the target at the next zone or at the starting point of the previous move.

Sources

• Nison, Steve: Japanese Candlestick Charting Techniques, New York Institute of Finance, 1991.
• Morris, Gregory L.: Candlestick Charting Explained, McGraw-Hill, 2006.
• Bulkowski, Thomas N.: Encyclopedia of Candlestick Charts, John Wiley & Sons, 2008.