Ladder Bottom & Ladder Top

A Ladder Bottom is a five-candle bullish reversal pattern. After a decline, three red candles step down like the rungs of a ladder. A red candle closes below its open; a green one closes above it. Its body is the thick part between the open and the close.

A fourth red candle follows, but this one has a long upper shadow: the thin line above the body, showing price traded above the open during the day. The fifth candle is green and opens above the fourth candle's body.

The mirror, a Ladder Top, forms after a rally: three green candles stepping up, a fourth green candle with a lower shadow, then a red candle that opens below the fourth body. This guide teaches the bottom first and the top as its mirror.

Five sessions, three moods: steady selling, a first test, and a turn.

A one- or two-candle pattern asks what those candles say. A Ladder Bottom asks a different question: which candle behaves differently from the ones before it? The first three candles set a habit. The fourth breaks it.

The habit is in the upper shadows. In the steady run a ladder starts with, sellers are waiting at every bounce, so price barely trades above each session's open before it is sold. The candles have short upper shadows or none. When a candle in that run suddenly grows a long upper shadow, buyers have done something they could not do for days: they pushed price up and made sellers work to take it back.

What the crack shows: a test. Buyers showed up with enough size to lift price for part of a session. That is the first evidence in the run that selling is meeting resistance.

What it does not show: a turn. Candle 4 still closed red, below its own open, so sellers won the session; usually it closes at a new low too. Taken alone, it is one more down day with a bounce that failed. Many declines show a crack like this and keep falling.

What turns it: the next open. When candle 5 opens above candle 4's body, the market opens above every price candle 4 opened or closed at, so anyone who sold at or below candle 4's open is under water from the first trade. A close above candle 4's high goes further: price has now cleared everything the failed bounce reached.

Judge the crack by contrast. A long upper shadow means more after three candles with none than after a choppy run where every candle has one. The skill carries to any chart: in a run of same-color candles, mark the first session that breaks the pattern, then watch what the next session does with it.

By name, a Ladder Bottom is bullish and a Ladder Top is bearish. Four of the five candles still point the other way, though. Everything rests on the fifth.

The fifth close decides. If candle 5 closes above candle 4's high, buyers have cleared the whole crack, and many traders treat that close as the confirmation. If candle 5 only opened above candle 4's body and closed below its high, wait for a later close above that high.

It fails on a close below the pattern's low, normally candle 4's low. That close means the crack was only a bounce and the decline has resumed.

Three other patterns share the Ladder Bottom's run of red candles. They differ in what the run means and in how it ends.

Crows are the steps without the crack. The first three candles of a Ladder Bottom can look like Three Black Crows, a bearish pattern of three long red candles. On their own, those candles say sellers are in control. The Ladder Bottom is what happens when that run meets its first real pushback. Read about the crows in the Three White Soldiers guide →

A breakaway is about a gap, not a shadow. A Bullish Breakaway also takes five candles, but it starts with a gap down and ends when a green candle closes back inside that gap. Its signal is the later close that fills that gap. A Ladder Bottom needs no gap at the start; its signal is the upper shadow on candle 4. Read the Breakaway guide →

A shadow that gets swallowed. In a Concealing Baby Swallow, buying also shows up on a red candle late in the run, but the next red candle swallows that shadow instead of a green candle opening above it.

The two are mirrors: every rule flips.

In a Ladder Top, three green candles each open and close higher. The fourth green candle dips well below its open during the day (a lower shadow, the thin line below the body), the first time sellers have pushed back, though it still closes green, usually at a new high. The fifth candle opens below the fourth body and closes red. A close below candle 4's low confirms it. The Ladder Top is less documented than the bottom, so definitions of it vary more.

The pattern says a steady decline cracked and turned. Context says whether it happened somewhere that matters.

Moving averages. A Ladder Bottom that turns up near a rising 50-day moving average reads as the end of a pullback inside an uptrend. Under a falling one, the larger trend still points down; a confirming close there would turn price against the decline, with the falling average above it rather than below it as support. Read the Candlesticks + Moving Averages guide →

Fibonacci levels. A ladder whose low lands on a common Fibonacci retracement (a level marking how much of the last rally has been given back) cracked at a price many traders had marked in advance. Read the Candlesticks + Fibonacci guide →

Volume. Heavy volume on candle 5 means many shares changed hands on the day the market opened above the crack, so the turn had real participation. Read the Candlesticks + Volume guide →

Volatility. The entry waits for a close above candle 4's high, a long-shadowed candle, so the stop is often more than a normal day's range below the entry. Measuring that range tells you whether the trade fits your risk before you take it. Read the Candlesticks + ATR guide →

A Ladder Bottom teaches you to read a decline as a sequence. Three candles set a habit of selling. The fourth breaks it with an upper shadow, the first sign that buyers can push back. The fifth shows whether that push meant anything.

Notice the crack, but do not buy it. Wait for a close above candle 4's high, put the stop below the pattern's low, and size the trade from that distance. The same habit of looking for the first candle that breaks a run will help on every chart you read.