Trend Reversal

A trend reversal occurs when the prevailing direction of a market, such as increasing (uptrend) or decreasing (downtrend) prices, changes. It signals that the current pattern is ending, and a new movement is beginning. For example, after a period of rising prices, a trend reversal might mean prices start to fall, indicating a shift from bullish to bearish sentiment. Traders watch for specific signals or indicators, like chart patterns or momentum changes, to identify potential reversals. Recognizing trend reversals helps investors decide when to buy or sell, aligning their strategies with the new market direction.