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Ladder bottom is a bullish trend-reversal pattern indicating the reversal of the existing downtrend. It is a five candlestick pattern which is somewhat similar to bullish concealing baby swallow pattern. Bullish ladder bottom is a moderately reliable pattern.



The requirements for the bullish ladder bottom pattern include,

• The pattern should be formed at the bottom of a significant downtrend.
• The first three days are noticeable with three long bearish (black/colored) candlesticks which close below the previous candlesticks. This formation is identical to three black crows candlestick pattern.
• The fourth day is also bearish with a small real-body and long upper shadow; it is an inverted hammer candlestick.
• The fifth day is a bullish day noticeable with a long bullish (white/colorless) candlestick which opens above the real-body of the fourth day candlestick.

Ladder bottom candlestick formation occurs when bears lose control over the existing downtrend. The bearish candlestick on the first three days indicates that the bears are controlling the market but the inverted hammer on the fourth day indicates that shorts are covering their positions and the trend is getting weak. The bullish candlestick on the fifth day indicates (a) the bulls have gained control over the market and (b) the beginning of a new uptrend.

The reliability of the Bullish ladder bottom pattern increases with increase in trading volume of fifth trading day, with higher closing of the fifth day candlestick and with significant reversal of previous downtrend. Before taking a position, traders should confirm the trend reversal which can be a bullish candlestick, a gap above opening or higher close on the next trading day.

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