Japanese candlesticks - Tower top
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Tower top
Definition: A tower top structure is comprised of several Japanese candlesticks. The bullish phase of the pattern can be formed by a succession of several small bullish (green) candlesticks or by a large candlestick. On the following candlesticks, there is a slowdown which results in lateral evolution in the price with small candlesticks (which form the top). Finally, one or more large bearish candlesticks (red) complete the structure. This is the opposite of the tower bottom.
Illustration:
Characteristic: A tower top often forms after a significant rise characterized by several large green Japanese candlesticks.
Significance: A tower top is a reversal pattern, it indicates a reversal of the bearish trend. This reflects a gradual exhaustion of buyers before the sellers forcefully regain control.
Note: It is not necessary to have two large bearish candlesticks to validate the pattern, there could only be one.
Invalidation: If the bearish candlestick(s) are not long, the tower top structure is invalidated.
