Ladder Bottom

Latter Bottom is not very common but an interesting trend reversal formation.

Imagine four consecutive bearish candles appearing in the downtrend. There is a series of lower high, lower low and lower closing prices.  The trend and price action are very bearish.

In the next session, price opens higher and above the closing price of previous bearish candlestick pattern and closes above the body of the previous candlestick pattern. It turns out to be a significant bullish body candle. This pattern is known as a Ladder bottom formation.

This pattern indicates that the significant bottom is in place. The pattern gets negated if price falls below the bottom price of the fifth candle of the pattern.

Even though this is a bullish reversal pattern, the price action is not very bullish. There is a strong downtrend followed by a bullish candle stick pattern which could be possibly a short-term pullback or a short-term correction. Seek more confirmation and evidence that there is a demand in the ladder bottom area and that the bottom is strong.

The pattern needs more evidence. Higher the size of the fifth candlestick pattern and higher the volume in that pattern, stronger the pattern.

Click here to learn more about the pattern

This pattern can be plotted on the chart by adding it from the study menu in TradePoint & RZone. The pattern is also available in the system builder section. By combining this pattern with other patterns and indicators, you can create your own trading strategies. For any group of stocks and market segments, you can scan and backtest stocks based on those strategies.

 

Open Demat Account