LeoGlossary: Reversal (Technical Analysis)

A change in the direction of the price of an asset. This occurs when an existing trend sees price actions that goes counter to that trend. Traders and investors often use indicators to help them identify reversals.

Following an uptrends, a reversal will see a downward movement in price. Downtrends can also bottom out, starting the process of having prices move higher.

As with all forms of technical analysis, one much be sure to examine indicators in the proper time frames.

Reversals are vital when contrarian investing.

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