Reversal definition

A reversal is a turnaround in the price movement of an asset: when an upward trend (or a rally) becomes a downward one (a correction), or vice versa. They can also often be referred to as trend reversals.

The opposite of a reversal is a continuation, or when an asset’s price trend holds. Often this means moving past key areas of support or resistance.

Technical traders use a variety of patterns and techniques in order to identify when a reversal may be on the cards. These include watching for completed patterns such as double/triple tops and bottoms, or a head and shoulders.

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