in the world of trading candlestick is One of the important features that traders must learn and understand, the reason is that the shape and arrangement of these candles can show the market conditions that are happening at the moment.
Among the various forms and forms Of the candlesticks that traders need to understand are the pivot candles. What is the top pivot candle? What does it mean? And what strategy should be used when having this shape? Here’s the discussion:
What is the Spinning Top candlestick pattern?
Spinning top is a candlestick pattern that looks like a small candlestick. And the size of the tail on both the top and bottom are similar. This pattern can appear either when the market is bullish or bearish.
The above spinning pattern is due to market uncertainty.
The small candle body indicates that there is no dominant side between the buyer and the seller, so if it occurs at the end of the trend, This pattern indicates a potential reversal. It is likely that this pattern indicates sustainability (😊).
because of this indication Pivot candles are one of the most widely used forms of asset trading. Whether it’s forex, stocks, cryptocurrencies or other instruments This candlestick can also appear at any time. Whether in a short-term, medium-term or long-term trend, however, the problem is that traders do not know whether this candle is forming at the end or in the middle of the trend. Therefore, it is necessary to develop more trading strategies.
Difference Between Spinning Top and Doji
Another useful candlestick pattern for trading is the doji. doji candle holder It is similar in appearance and shape to a top, which is a form of market uncertainty. The difference between the two is the size of the candle tail.
Doji candlesticks can be shaped like a positive number with the bottom tail being long. cross-shaped with a long upper tail or a star with a very small body like a normal horizontal line with the tail being the same length.
The top pivot candlestick and the doji can appear at any time. Either at the end or in the middle of the trend. although it often indicates a reversal. But confirmation of the next candle and other technical indicators is necessary in order to be able to determine the indicators of these two candles.
How to trade using the above pivot candlestick pattern
as mentioned above The swirling candlestick can be in the middle or the end of the trend and can be displayed. reversal as well as sustainability One way to trade using such an unstable pattern is to wait for a confirmation signal.
One of these confirmation signals is in the form of candlesticks afterwards. In other words, if the candlestick that formed after this pattern closes at a price below the upper pivot point, then the candlestick that formed after this pattern closes at a price below the upper pivot point. This means that there will be a reversal of the signal from the first period to an uptrend to a downtrend (downtrend).
Conversely, if the closing price of the next candle is higher than That means a reversal is up. The following candlesticks indirectly show who is the winner between the sellers (bears) and buyers (bulls) in the market.
So what if the closing price of the next candle is in the same area as the opening and closing price of the Spinning Top? This indicates that there is a continuation pattern or a continuation trend will continue for a period of time. Because these candlesticks show that buyers and sellers still determine their superiority in the market.
2. Using technical indicators
One disadvantage of opening a position after the confirmation candle is that you can start late. If the candles after that show a bullish reversal This means that you cannot buy the lowest price of the asset.
Another way to confirm the direction of the trend after a pivot candle is to use technical indicators that can show a continuous trend of buying and selling pressure. These technical indicators, such as the relative strength index. average direction index; and moving average divergence convergence (MACD).
These indicators can be used to determine the strength of a trend. Regardless, the current trend is weakening to have the potential for a reversal to occur. Or is the trend strength stronger? which results in sustainability
using this technical indicator At least you know the potential trend before more or less of the confirmation candle. So you can open a sell or buy position faster. However, this move is a bit riskier than waiting for the confirmation candle. Because it could be that the price is not moving in the direction you want.
3. Using Fibonacci Retracements
This ensures that the confirmation candle shows the direction of the trend reversal. You can wait for the candlestick to experience a real breakout. A true breakout is a condition when the body of the candle breaks through successfully. support or resistance. A true breakout is one of the most powerful reversal confirmation signals.
The problem is that manually drawn support and resistance lines often don’t respond to short-term or very short-term price changes. The solution to this problem is to use Fibonacci’s retreat.
Fibonacci retracement is a method of creating support and resistance lines based on Fibonacci numbers and the Fibonacci golden ratio as they are built according to ratios. The support and resistance lines formed this way are very responsive to short-term price changes.
This indicator can be used as a tool to confirm the upcoming trend after the pivot candlestick. which means If the closing price of the confirmation candle is above or below the pivot point and breaks the Fibonacci support and resistance, what will happen next is a reversal of the price.
The upper pivot candle is a candlestick pattern that shows the uncertainty of the market movement. This candle can be in the middle or end of the trend and can be displayed. trend reversal and continuing trend at that time.
Therefore, traders have to use other methods to determine market conditions after this candlestick appears. These other methods, for example, wait for a confirmation candle. Use technical indicators that can show trend strength. and use the Fibonacci retracement support and resistance lines to confirm the breakout.
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