Ladder Bottom/Top

The ladder bottom is a five-candle bullish reversal candlestick chart pattern. The ladder top is a five-candle bearish reversal candlestick chart pattern.

The ladder bottom is a bullish reversal pattern with the following characteristics:

• The market is in a downtrend.
• The first, second, and third candles have long black real bodies with each open and close below the open and close of the previous candle.
• The fourth candle is black with a short real body and long upper shadow.
• The fifth candle is white with an open above the real body of the prior candle.

The theory behind the pattern is that a downtrend loses momentum with an inverted hammer candle that creates an opening for bulls to take over and reverse the trend. In addition to not being common, the ladder bottom tends to be mediocre at predicting a reversal. However, it tends to work exceptionally well when it makes the right prediction, with a strong price movement higher.

Traders should use the ladder bottom in conjunction with other technical indicators to predict bullish reversals. If the pattern does occur, traders may want to exit any short positions or adjust their stop-loss levels, but betting on a long position may require additional confirmation through other chart patterns or technical indicators.

The ladder top is a bearish reversal pattern with the following characteristics:

• The market is in an uptrend.
• The first, second, and third candles have long white real bodies with each open and close above the open and close of the previous candle.
• The fourth candle is white with a short real body and long lower shadow.
• The fifth candle is black with an open below the real body of the prior candle.

The theory behind the pattern is that an uptrend loses momentum with a hammer or harami candle that creates an opening for bears to take over and reverse the trend. In addition to not being very common, the ladder top tends to be mediocre at predicting a reversal. However, it tends to work exceptionally well when it does make the right prediction, with a strong price movement lower.

Traders should use the ladder top in conjunction with other technical indicators to predict bearish reversals. If the pattern does occur, traders may want to exit any long positions or adjust their stop-loss levels, but betting on a short position may require additional confirmation through other chart patterns or technical indicators.