Bearish Spinning Top Candlestick Pattern: Complete Guide for Beginner Traders

Understanding market movements is essential for any trader, whether you are trading stocks, forex, or cryptocurrencies.

Among various technical analysis tools, candlestick patterns play a vital role in helping traders make informed decisions.

One such important pattern is the Bearish Spinning Top Candlestick Pattern.

In this article, we’ll explore what it is, how to identify it, its significance, and how to trade effectively using this pattern.

What is a Spinning Top Candlestick Pattern?

A Spinning Top is a type of candlestick pattern commonly observed in financial charts.

The unique characteristic of this pattern is its small real body and long upper and lower shadows.

This structure indicates indecision in the market. Neither bulls (buyers) nor bears (sellers) have clear control, resulting in a small price movement during the session.

Components of a Spinning Top:

Small Real Body:

The difference between the opening and closing price is minimal.

Long Upper Shadow:

Shows that buyers tried to push the price up.

Long Lower Shadow:

Shows that sellers attempted to push the price down.

Spinning Tops can appear in both uptrends and downtrends. They are neutral patterns on their own, but their position and the trend preceding them help determine the likely market direction.

What is the Bearish Spinning Top Candlestick Pattern?

When a Spinning Top appears in an uptrend and is followed by a bearish signal, it becomes significant as a Bearish Spinning Top Candlestick Pattern.

This indicates that the momentum is weakening, and a possible trend reversal or pullback could happen.

Market Psychology Behind It:

The small real body suggests that neither buyers nor sellers dominated the trading session.

The long upper shadow indicates that buyers tried to push prices higher, but sellers countered aggressively.

The long lower shadow shows that sellers also tried to take control but failed to maintain the downward pressure.

This indecision, especially after a strong uptrend, signals a potential bearish reversal. The market is showing signs of exhaustion, and cautious traders prepare for a price drop.

How to Identify Bearish Spinning Top in a Chart?

For beginners, spotting a Bearish Spinning Top is not difficult if you follow these simple steps:

1. Observe the Trend:

The pattern becomes significant when it appears in an existing uptrend.

2. Spot the Spinning Top:

Look for a candlestick with:

A small real body.

Long upper and lower shadows.

The real body can be either bullish (green) or bearish (red), but in the bearish case, a red body is more significant.

3. Check Confirmation:

After the Spinning Top, ideally, the next candle should be a bearish candle (closing lower than the Spinning Top) to confirm the reversal signal.

Example:

Imagine a stock trending upward for several sessions. Suddenly, a candlestick appears with a small body and long shadows on both sides.

The next candle closes lower, validating the Bearish Spinning Top pattern and signaling a possible reversal.

Significance of Bearish Spinning Top Pattern

Why should traders care about the Bearish Spinning Top Candlestick Pattern? Let’s break down its significance.

✅ Indicates Market Indecision:

The pattern reflects hesitation between buyers and sellers, which can be a critical sign after a strong upward movement.

✅ Signals Potential Trend Reversal:

Although not a strong reversal pattern on its own, in combination with other signals or indicators, it becomes powerful in predicting a bearish turn.

✅ Acts as a Warning:

It doesn’t guarantee a reversal but warns traders to be cautious and possibly look for confirmation before making decisions.

⚠️ Limitations:

Do not rely solely on this pattern for making trading decisions.

It works best when combined with other technical analysis tools like RSI, Moving Averages, or trend lines.

False signals can occur in sideways markets.

How to Trade Using Bearish Spinning Top Candlestick Pattern?

Trading with the Bearish Spinning Top Pattern requires a cautious and systematic approach. Below is a simple strategy you can follow.

Step 1: Wait for Confirmation

Do not act immediately after spotting the Spinning Top. Wait for the next candlestick to close lower to confirm the potential reversal.

Step 2: Entry Point

Once confirmed, enter a short position or sell the asset.

Alternatively, if trading stocks, consider closing long positions.

Step 3: Set Stop Loss

Place the stop-loss slightly above the high of the Spinning Top candle.

This protects your capital in case the market reverses unexpectedly.

Step 4: Combine with Indicators

Use Relative Strength Index (RSI): If RSI shows overbought conditions (e.g., above 70), the Bearish Spinning Top is more reliable.

Moving Averages: A Bearish Spinning Top forming near resistance levels or after a bullish cross can reinforce the signal.

Example Trading Scenario:

Suppose a cryptocurrency like Bitcoin is in a steady uptrend. A Bearish Spinning Top appears at a significant resistance level, followed by a bearish candle.

RSI is around 75 (overbought). A trader enters a short position, sets a stop-loss above the Spinning Top high, and waits for the price to drop.

Common Mistakes Beginners Make

While the Bearish Spinning Top is useful, beginners often fall into some traps:

❌ Mistake 1: Acting Without Confirmation

Rushing into a trade without waiting for the next bearish candle can lead to losses. Always wait for proper confirmation.

❌ Mistake 2: Ignoring Market Context

Applying the pattern in sideways or choppy markets leads to false signals. Context matters — it should appear after an uptrend.

❌ Mistake 3: Overreliance

Some traders treat every Spinning Top as a reversal signal. Instead, it should be used as an early warning sign in combination with other tools.

Real Market Example of Bearish Spinning Top

Let’s analyze a practical example from the stock market:

Case Study: Apple Inc. (AAPL)

Over several weeks, AAPL was in a strong uptrend.

On a particular day, a Bearish Spinning Top Candlestick appeared near a resistance zone.

The next day, a bearish candle closed below the Spinning Top, confirming the pattern.

The stock price started to decline steadily after this pattern.

This real-life example demonstrates how the Bearish Spinning Top can warn traders of a potential reversal and help them adjust their strategies.

Conclusion

The Bearish Spinning Top Candlestick Pattern is a powerful tool in a trader’s arsenal, especially for identifying potential reversals in an uptrend.

However, it is crucial to use it wisely, combining it with other technical indicators and confirmation signals.

✅ Key Takeaways:

Look for the pattern in an uptrend.

Focus on confirmation by the next bearish candle.

Combine with RSI, Moving Averages, or trend lines.

Avoid acting on it alone without context.

Use proper risk management, especially stop-loss orders.

By practicing spotting this pattern on demo accounts and studying real-life examples, you’ll sharpen your technical analysis skills and make smarter trading decisions.