Tower Top Candlestick Pattern
The tower top is a reversal pattern that occurs at high price levels. Typically one or more long bullish candlesticks are followed by a few smaller real body candlesticks and then the pattern is completed with one or more large bearish candlesticks. The bullish candlestick(s) on the left side and the bearish candlestick(s) on the right side make up the two sides of the tower, and the small real body candlesticks make up the roof of the tower.
Tower Bottom Candlestick Pattern
The tower bottom is a reversal pattern that occurs at low price levels. There is one or more long bearish candlesticks followed by a few smaller body candlesticks and then concluded with one or more large bullish candlesticks. The bearish candlestick(s) on the left side and the bullish candlestick(s) on the right side make up the two sides of the tower, and the smaller real body candlesticks make up the floor of the tower.
Tower Top Candlestick Chart Example
The tower top candlestick pattern is illustrated above on the chart of the Energy SPDR (XLE). A large bullish candlestick makes a new high for the uptrend and is followed by five relatively small real bodied candlesticks. The lows made by these small bodied candlesticks were penetrated by the large bearish candlestick that makes up the right side of the "tower". The chart above was actually a head and shoulders pattern, where the "head" part of the pattern was created by a bearish tower top formation.
Tower Bottom Candlestick Chart Example
The chart above of the S&P 500 SPDR ETF (SPY) shows a large bearish candlestick (left side of the tower) followed by four relatively smaller bearish candlesticks. The tower bottom pattern is completed by the large bullish candlestick (right side of the tower) that closed at the same price level that the bearish candlestick opened five days before.
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