Reversal
A sudden change in the price direction of a stock, index, commodity or derivative security.
Also referred to as a "trend reversal", "rally" or "correction".
Investopedia Says:
A reversal can be a positive or negative change against the prevailing trend. Technical analysts watch for these patterns because they can indicate the need for a different trading strategy on the same security.
For example, if a technical analyst holds stock ABC and notices a reversal pattern, he or she may want to consider closing his/her existing long position and assuming a short position to capitalize on the potential downward movement of the stock's price. Related Terms:
Average Directional Index - ADX
Buy Weakness
Dead Cat Bounce
Derivative
Fakeout
Morning Star
Stem The Tide
Technical Analysis
Trend
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