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:

How does a trader determine the direction of the market? Learn how to identify the market conditions to help you determine price movement.
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