Identifying spinning tops

To qualify as a spinning top, a candlestick should have a small body and wicks that stick out on both ends. The body should appear close to the center of the range of the day's price action. Also, the wicks should both be at least as wide as the candle section of the candlestick. For a clear picture of what a spinning top looks like, check out Figure 6-14.

Figure 6-14:

Examples of spinning tops.

The color of a spinning top's candle isn't terribly important, although it's nice to see a dark body if you're expecting a reversal of an uptrend (sell signal) or a white body if you're expecting a reversal of a downtrend (buy signal).

One of the best features of spinning tops as compared to dojis is that spinning tops appear much more frequently. Dojis are powerful signals, but they can be pretty rare. I scanned many charts to come up with the examples for this book, and it was much, much easier to find good examples of spinning tops than it was to track down dojis. And with more appearances come more chances to trade and make more profits!

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