The Forex market is one of the most liquid and high-volume financial markets in the world. In order to be successful here, Japanese candlestick patterns need to be read and future price movements need to be predicted at a minimum, at least to some extent. In the field of technical analysis, there are various indicators, charts, and candlestick patterns. One of these patterns is the "Ladder Top" candlestick pattern.
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| Ladder Top Candlestick Pattern |
Type: bearish
Trend direction: reversal
Opposite pattern: Ladder Bottom
Formation:
Ladder Top takes its name from the ladder-like structure
formed on the chart. It usually appears at the peak of a rising trend and
represents a pattern resembling the steps of a ladder. This pattern has a
notable feature and signals significant changes in price action. While the
Ladder Top candlestick pattern is forming, several consecutive candles follow
each other. The body lengths of these candles are usually equal, but they can
rarely be different. The candle in the last step may sometimes have a long wick
and a short body. But the candles must be the same color (green).
Trading:
The Ladder Top candlestick pattern is usually a formation
indicating a trend reversal. When trading in financial markets, upon observing
consecutive candlesticks arranged on an inclined line in an uptrend chart, we
can say that the Ladder Top pattern has formed. This formation often signals
the end of a bull market or a pullback. Over time, buyers begin to withdraw
from the market, and the formation of the first bearish candlestick signals the
beginning of the decline. Now, we can consider opening short positions.
Selling: The completion of the pattern can signal a
possible sell opportunity. We can place a sell order below the close of the
first bearish candle (red candle).
Stop Loss: We may prefer to place our stop-loss level
above the formation of the pattern or above the high of the first bearish
candle (red candle).
Target: When the pattern is completed, a downward
trend in prices is expected. When setting a target, we can use a method such as
the height from the beginning to the end of the pattern as our first
preference. See the trading example on the Euro/US Dollar 4-hour chart:
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| Selling trade on EUR/USD chart with Ladder Top pattern. |
Remember: Forex trading is risky, the "Ladder Top"
pattern is just a tool. Like any trade, emotional control and risk management
are important. Experienced traders know that tools like the "Ladder
Top" are not reliable on their own, and therefore support their analysis
with a variety of factors.