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Five candles marking the end of a rally. Three steps up the ladder, then reversal signals, then confirmation.
The Ladder Top is a five-candle bearish reversal pattern at the top of an uptrend. Three consecutive bullish candles (the ascending ladder) are followed by a bullish candle with a long upper shadow, then a bearish candle that gaps down or opens below the prior candle.
The pattern is the mirror of the Ladder Bottom. The three bullish candles show an orderly advance, the fourth candle's upper shadow reveals that sellers are beginning to defend higher prices, and the fifth bearish candle confirms the reversal.
The Ladder Top shows a structured advance that hits its ceiling. Candles 1, 2, and 3 are orderly bullish candles — each opens within the prior body and closes higher. The advance is methodical, like climbing a ladder.
Candle 4 is bullish but sports a long upper shadow. During the session, price pushed significantly higher but sellers rejected it. The candle still closes positive, but the upper wick is a red flag — selling pressure is emerging at these heights.
Candle 5 is the breakdown — a bearish candle that gaps down or opens below Candle 4. The orderly climb is over. The sudden bearish shift traps buyers who entered near the highs, and the reversal gains momentum as stops are triggered.
Conservative: Enter short on a break below Day 5's low.
Aggressive: Enter short at close of Day 5.
Above the high of the pattern (the peak of the three advancing candles). A break above this level means the uptrend has resumed.
T1: The open of the first bullish candle in the pattern. T2: Previous swing low or support level. Like the ladder bottom, expect a measured decline rather than a crash.
Minimum 1:2. Use the pattern high as a clear invalidation level.
The Ladder Top mirrors the Ladder Bottom. The transition from orderly advance to emerging supply (Candle 4's shadow) to bearish confirmation (Candle 5) creates a reliable reversal narrative.
Five higher highs followed by reversal. Buyer exhaustion at its finest - everyone who wanted in is already in.
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