What is a trend reversal?

    A trend reversal is when the market direction changes completely and moves in the opposite way to the current trend.

    Remember: A trend reversal is different from a correction.

    For example, when an uptrend turns into a downtrend, or a downtrend turns into an uptrend, a reversal has occurred.

    Trend reversals can occur at any time and can be difficult to predict. They can be caused by a change in fundamentals that might lead to a long-term price movement in the opposite direction.

    In the chart below, the price is in an uptrend (1) and then reverses to the downside (2).


    Further reading

    Visit our lesson on market sentiment to help you identify reversals and the direction of the markets:

    Visit our beginner strategy to take what you have learned and put it into action: