Reversal

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Dictionary Says

Definition of 'Reversal'

A change in the direction of a price trend. On a price chart, reversals undergo a recognizable change in the price structure. An uptrend, which is a series of higher highs and higher lows, reverses into a downtrend by changing to a series of lower highs and lower lows. A downtrend, which is a series of lower highs and lower lows, reverses into an uptrend by changing to a series of higher highs and higher lows.

Also referred to as a "trend reversal", "rally" or "correction".

Reversal
Investopedia Says

Investopedia explains 'Reversal'

A reversal can be a positive or negative change against the prevailing trend. Technical analysts watch for these patterns because they can indicate the need for a different trading strategy on the same security.

For example, if a technical analyst holds stock ABC and notices a reversal pattern, he or she may want to consider closing his or her existing long position and assuming a short position to capitalize on the potential downward movement of the stock's price.

Articles Of Interest

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    Retracement Or Reversal: Know The Difference

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  2. Trading The MACD Divergence

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  3. Divergence: The Trade Most Profitable

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  4. Day Trading Strategies For Beginners

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  5. Introduction To Technical Analysis Price Patterns

    To "find your game" in technical analysis, you need to be able to recognize reversals and continuations as they form.

  6. Forex: The Memory Of Price Strategy

    Hate getting stopped out right before the price reverses? This forex trading strategy may help.

  7. Spotting A Market Bottom

    Recognizing a market bottom can lead to huge opportunities for an investor. We go over how you can spot the bottom so that you can reap the rewards.

  8. Candle Sheds More Light Than The MACD

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  9. Gauging Major Turns With Psychology

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  10. Tales From The Trenches: The Rising Wedge Breakdown

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