The Forex trading example we have for you today involves a well-known candlestick pattern called Spinning Bottom candlestick. This is a single candle pattern that has reversal functions on the chart. We spotted the pattern on the 15-minute chart of the USD/CHF Forex pair and we traded it successfully. The candle emerged during a price decrease and gave us a sign that this might be a turning point on the chart.

Live Trading Example

Signals of the Spinning Bottom Candlestick Trade

1. The price action created a sharp drop.
2. A Spinning Bottom candlestick appeared after the two big candles that formed the drop.
3. The price started pulling back after the close of the Spinning Bottom candle

Stop Loss and Targets of the Spinning Bottom Trade

We placed my Stop Loss order below the Spinning Bottom pattern taking into consideration the previous bottom on the chart. After all, if the price reaches that level and breaks the two bottoms, this will minimize the chance for a successful pullback.

The interesting fact in the video was the target of the trade. The minimum target of the candlestick patterns trade stays at a distance equal to the size of the pattern taken from the upper to the lower candlewick tips. In our case, we extended the target twice. The reason for this was the size of the sharp drop. Long ago Newton has said “For every action, there is an equal and opposite reaction.” Our experience says that this rule fully applies to Forex trading. Since the price created that sharp drop, we assumed that the pullback will be approximately the same size. And the Spinning Bottom candlestick was the ultimate signal for the beginning of the pullback.

Notice that the price action approached the area around the bottom of the Spinning Bottom candle. However, ours Stop Loss order was well positioned, which kept us alive in the trade. Couple hours later the price action reached the Take Profit order and we collected 11 pips = 0.11% profit.

Muhammad Awais