Hello Dear Readers. I am back with a new article after a long break. We know that candlestick analysis is an indispensable part of our trading strategies in financial markets. Day by day, interest in Japanese candlesticks in technical analysis is increasing. In this article, I have decided to focus on the "Tower Bottom" candlestick pattern.
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| The Tower Bottom Candlestick Pattern |
- Topic: Tower Bottom
- Type: bullish
- Trend direction: reversal
- Opposite pattern: Tower Top
What is the origin of the name "Tower Bottom" pattern?
The name of the Tower Bottom pattern comes from the appearance of the pattern, which usually resembles a structure resembling a tower. The term "Bottom" indicates that the pattern forms near the bottom of the price chart. The Tower Bottom pattern represents a candlestick pattern that forms at the bottom of a pattern resembling a tower at the end of a downtrend on a price chart. This pattern appears to indicate a turning point in the market. Therefore, the name of the pattern may have been chosen to reflect this significance.
What is the structure of the Tower Bottom pattern?
The Tower Bottom pattern is a candlestick analysis pattern that consists of several candlesticks. This pattern has a structure that indicates the end of a downtrend and the possibility of a price rise. The structure of the Tower Bottom pattern is as follows, with the candles it contains:
First Candlestick (Bearish)
The pattern usually begins with a strong bearish candle, large, red (or black), and clearly showing selling pressure. This candle sets the initial tone, signaling that sellers are in control.Small-bodied Candlesticks (Consolidation phase)
Next comes a series of smaller candles. These can have long or short wicks, or sometimes no wicks at all. They may be bullish or bearish, or sometimes all the same type. What really matters is that their bodies are small, showing indecision and sideways movement in the market.👉 The number of these candles isn't fixed. In many cases, you'll see two or three, but sometimes there can be more, depending on how long the market stays in consolidation. This middle phase is basically the "pause" where neither buyers nor sellers have a clear upper hand.
Last Candlestick (Reversal)
Finally, the pattern completes with a large bullish candle, usually green or white. This candle often stands out because it shows buyers stepping back in with strength, suggesting that an impending trend reversal is underway.The Tower Bottom candlestick pattern is generally interpreted as a reversal signal after a price downtrend. After the pattern formation is complete, prices are expected to rise.
How to trade with the Tower Bottom pattern?
When it comes to trading financial markets, patience really is key. You don't want to jump in too early—you need to let the Tower Bottom pattern fully form before making a move. If you spot this pattern around a strong support level, that’s usually a good sign to think about going long, since the market may be gearing up for a reversal. But here’s the thing: no pattern is 100% reliable on its own. That’s why it’s smart to combine it with other tools, like volume analysis, moving averages, or momentum indicators, to confirm the setup. And of course, risk management is just as important as the trade itself, setting stop-losses and managing your position size can make all the difference. In short, wait for the pattern, confirm it with other signals, and never forget to protect your capital.
- Entry (Buy): A long position can be opened above the closing price of the last long green candle.
- Stop Loss: The stop loss level can be set slightly below the lowest point of the pattern.
- Target: The target price can be set as twice the height of the first candlestick. Additionally, profit-taking levels can be determined based on technical analysis tools such as major resistance levels on the price chart or moving averages.
An example of trading with the Tower Bottom pattern is given
below in the 4-hour chart of Euro/USD:
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| Tower Bottom in Euro/USD. |
Let It Be Known That: When trading in the Forex market, relying on a single pattern is risky. Candlestick patterns like the Tower Bottom pattern can also be misleading, so they should always be supported by other analysis tools.