Reversal

A reversal refers to a change in the direction of an asset’s price trend. This means that if a market has been moving upward (an uptrend), a reversal would signal the start of a downward trend, and vice versa. Reversals can occur in any financial market and over various timeframes, from minutes in day trading to months or years in long-term investing.

Recognizing these changes in advance allows traders to change their strategies, manage risk, and adust to the new direction in the market.

Browse through other terms in our Trader’s Dictionary.