Recognizing a buy signal with a spinning top

Figure 6-15 is a chart of the futures contracts that trade on the Standard & Poor's 500 Index (S&P 500). The low of a downtrend culminates with a spinning top, and a trader who recognizes this signal is rewarded with a nice up move if she shows a little patience.

Figure 6-15:

A long spinning top on S&P 500 futures contract that yields a nice profit.

For this reversal pattern, I wanted to use a chart that appeared to be failing initially. Although the futures contract in Figure 6-15 didn't immediately reverse to an uptrend, it also didn't match the low of the signal day. The contract came close, but the low was never broken, so the signal was never violated. Such a case may test your patience, but sticking with this buy signal would've been rewarded after a few days of watching it go nowhere.

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