Ladder Bottom |
Characteristic of Candlesticks: Reversal
Relevance of Candlesticks: Bullish
Prior Trend of Candlesticks: Bearish
Reliability of Candlesticks : 4th Grade
Confirmation of Candlesticks: Rare
Candlestick Patterns Key Reference |
DESCRIPTION
Ladder Bottom pattern is observed by the fourth candlestick when sellers may have the chance to close their sell position with profit.
Following candlestick is a bullish candlestick as a result which implies a bullish reversal.
PATTERN RECOGNITION
1. The Ladder Bottom pattern is identified by a downtrend.
2. We will see three long bearish candlesticks with lower opens and closing consecutively just like the Three Black Crows pattern.
3. Then we will see a bearish candlestick with long upper shadow (inverted hammer).
4. Finally we will see a bullish candlestick open above the previous bearish candlestick body.
EXPLAINATION
After three consecutive bearish (Marubozu) candlesticks, an inverted hammer indicates end of downtrend.
This invested hammer pattern warn sellers that the market will not go down further, thus resulting them to close their short position for profit.
As a result, we see a following bullish candlestick open above the previous candlestick body and closes considerably higher. If the volume is high on the last candlestick, a trend reversal will occur.
The 4th grade reversal patterns are rare reversal patterns that may require confirmation in the next session.
POINT TO NOTE
A confirmation on the sixth bullish candlestick is required with a large gap upward or a higher close to ensure the reversal of trend.
CANDLESTICK PATTERNS KEY REFERENCE
Irrespective of Color (Can be bullish or bearish) |
Uptrend |
Consolidation |
Downtrend |
ANTICIPATED DIRECTION OF TREND
Lighter Arrow = Lower Probability
Solid Arrow = Higher Probability
More Likely to go sideway, Less likely to rally
|
More likely to rally, Less likely to go sideways
|
More likely to go sideway, Less likely to fall
|
More likely to fall, Less likely to go sideways |
