Tower Bottom

Tower Bottoms are major reversal structures that involve a series of candlesticks.

Their global shape looks like a tower, hence their name. They can be observed over all time units.

A Tower Bottom's main characteristics are:

• The Tower Bottom must occur after a downtrend.

• Powerful black candlesticks form the fall.

• Powerful white candlesticks form the rise.

Such a pattern is formed when, after a downtrend, the fall speeds up, thus forming one or several long black candlesticks. Then, the fall slows down and prices struggle to reach new lows. The bears start to doubt, they hesitate to take their benefits and their stops become more frequent.

The contrarians begin to place themselves. The rise in prices lets new bullish traders enter and it triggers the bearish traders’ stops, what in turn accelerates the new uptrend and forms long white Japanese candlesticks. In this case, the reversals are reinforced by the presence of a support at 10700 points. The first Tower Bottom does not give rise to a steep reversal but the second one, reinforced by the formation of a Double Bottom, gives rise to a true uptrend.

Tower Bottoms are very similar to Frying Pan Bottoms and they also are major reversal patterns. Tower Bottoms form rather steep reversals whereas Frying Pan Bottoms, that reverse more slowly, must be confirmed by a gap.

Positions can be taken during Tower Bottoms, especially if other elements such as the presence of a support or the formation of a Double Bottom can confirm the analysis. The invalidation threshold will then be placed below the Tower Bottom.