Reversal

Reversal

What is a trend reversal?

A trend reversal is when the market direction changes completely and moves in the opposite way to the current trend.

Remember: A trend reversal is different from a correction.

For example, when an uptrend turns into a downtrend, or a downtrend turns into an uptrend, a reversal has occurred.

Trend reversals can occur at any time and can be difficult to predict. They can be caused by a change in fundamentals that might lead to a long-term price movement in the opposite direction.

In the chart below, price is in an uptrend number_1 and then reverses to the downside number_2.

Uptrend break

Further reading

Visit our lesson on market sentiment to help you identify reversals and the direction of the markets:

Lesson
How does a trader determine the direction of the market? Learn how to identify the market conditions to help you determine price movement.
You haven't attempted the quiz yet.
41

Visit our beginner strategy to take what you have learned and put it into action:

Register Now - It's free!

By clicking on the "Get instant access" button, you agree that you have read, understood, and accepted the Terms & Conditions.
Or