Reversal Pattern

A reversal pattern is a specific configuration of price action on a chart that suggests the current trend is about to change direction. Common examples include head and shoulders, double tops, and double bottoms.

These patterns form when the balance between buyers and sellers shifts, indicating a potential exhaustion of the current trend. Traders look for these formations to enter positions at the beginning of a new trend.

They are essential for identifying major market turns. Confirmation is usually required through volume analysis or indicator confirmation.

They provide a structural way to view market sentiment shifts.