What it is
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 psychology
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.
Identification
- 01Prior uptrend — Must form after a rise
- 02Three bullish candles (ladder) — Each closing higher
- 03Fourth candle bullish with upper shadow — Shows selling pressure emerging
- 04Fifth candle bearish — Opens below Candle 4, confirms reversal
- 05Progressive advance — Candles 1–3 step up methodically
- 01Gap down on Candle 5 — Dramatic reversal signal
- 02High volume on Candle 5 — Confirms selling conviction
- 03Pattern forms at major resistance — Prior highs, Fibonacci extensions
- 04Long upper shadow on Candle 4 — Stronger rejection signal
- 01No upper shadow on Candle 4 — Key signal missing
- 02Candle 5 is weak — Small bearish candle doesn't confirm
- 03No prior uptrend — Needs bullish context
- 04Candles 1–3 not orderly — Should be a clear stepping advance
Execution framework
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.
Context matters
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.
- 01At major resistance after extended advance
- 02With bearish divergence on RSI
- 03Volume declining on Candles 1–3, expanding on Candle 5
- 04On daily or weekly timeframes
- 05Clear gap down on Candle 5
- 06After parabolic advance
- 01In a strong uptrend without resistance
- 02Without upper shadow on Candle 4
- 03On low timeframes
- 04If Candle 5 is very small
- 05Against higher-timeframe bullish trend
- 06If the three bullish candles are very small
Five higher highs followed by reversal. Buyer exhaustion at its finest - everyone who wanted in is already in.
Compare the full pattern set
Use the library to compare similar structures before deciding what the chart is actually building.