Reversal Pattern

reversal pattern

In technical analysis, a chart formation that indicates a market top or a market bottom. A reversal pattern, which usually occurs after a major movement in the price of a stock or in the entire market, is an indication that investors should adjust their positions to take advantage of the coming change in market direction. A saucer and a head-and-shoulders are reversal patterns.

---

Reversal Pattern

In technical analysis, any pattern on a chart that indicates a previous trend is changing to a new trend. Generally speaking, any trend in which the highs are lower than the previous highs is a bearish reversal pattern, while any trend in which the lows are higher than the previous lows is bullish. However, some reversal patterns are more complex. Examples include a head-and-shoulders pattern and an outside reversal.