What is Indecisiveness ?
Hello, Guys, in the last session we studied about MARUBOZU candle. Bullish or Bearish MARUBOZU shows us a very strong trend, but have you ever wondered what if there is No fixed trend in the market(Spinning top candle)? What happens when there is a tough fight between the Bulls and Bears?
What if there is indecisiveness in the market? Is there any candle that tells us about this? Yes, there is one candle, and we are going to study the same candle today. But before that, can you guess what the use of studying such a thing which doesn’t imply any single trend is?
Use of Indecisiveness
The candle which tells you about indecisiveness may not tell you the exact entry point, but see this, if there is one ongoing trend, say Bullish or Bearish. How will you come to know that trend is getting weak? Or the trend hit the breaks now, it may reverse or consolidate here. You guessed right! It’s an indecisiveness signal which tells us about this. That’s why it’s very important to study it.
Which Candlestick signal indecisiveness?
It’s not one but two candles which show us that there is no fixed trend in the market. The name of two candles that tell us about indecisiveness is the Spinning top candle and Doji. Both imply the same signal, but there is a difference in their size. Let’s see one by one with examples.
Spinning top candle
Looking at the picture, you can see that the spinning top is a candle where there is no specific trend, that’s why there is a small body in the middle and a long shadow on either side. Both the Upper and lower shadows are almost equal, so, as I said before, there is no specific trend here, or you can say tough fight between Bulls and bears.
Types of Spinning top candle
As you can see, there are two basic types of Bullish and Bearish based on the color of body. Not much of a difference in Candlesticks size. Also, note that the Candlestick color of body hardly matters as both implies indecisiveness. Also, the body which is in the middle in the picture won’t be exactly at the middle, there will be slight variations.
Example of spinning top
Check this example and see the marked candles in the picture.
We will study RSI, MACD, moving average later, but as of now we only focus on the last two marked candles.
The body is not exactly in the middle, but Bulls are trying to take the stock higher and at the same time bears are putting it down. So there is uncertainty in the stock as of now. Let’s see another example where we will understand the importance of the spinning top. See the below picture daily chart of Stock Relaxo.
You can see the prior trend was a strong bearish trend for the last 6 candles so for 6 days in this chart. But then the appearance of two spinning top candles which tells you bears got weak and Bulls are coming back in this stock. And that’s why the next bullish candle is placed, which is not perfectly Bullish but see the Bulls are back after a long Bearish trend as you can see in the green body in the middle and the shadow getting lower.
So some upside is possible now in Relaxo and here the spinning top candle gave us indications, and the next appearance of the Bullish candle now gave us an entry point as well for fresh buying or even you can say exit point for bears by that spinning top candle. Now let’s study another candle which has the same effect but little difference in size compared to the spinning top.
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