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