Reversal

Reversal is a term describing a change in the trend of a security’s price. An uptrend which has a series of higher lows and higher highs reverses into a downtrend of lower highs and lower lows and vice versa.

Some traders use certain reversal patterns to confirm a reversal in a trend.

Reversals are clear only after the fact, but this may mean the price has moved a lot against the previous trend. Thus, some traders attempt to time reversals the moment they begin. Common tactics include looking for panic buying, panic selling(capitulation),  or other signals that may predict an end to the current trend. However, strong trends usually persist for a while and anticipating reversals is usually uncertain and risky.