THE ETERNAL SOVEREIGN

Reversal Patterns

Reversal Patterns are technical chart patterns that signal a potential change in the current market trend — from uptrend to downtrend or from downtrend to uptrend.

In simple terms, they help traders anticipate where a trend may end and reverse direction.

  • 📈 Uptrend → possible bearish reversal
  • 📉 Downtrend → possible bullish reversal

Key Characteristics

  • Forms at the end of a trend
  • Shows loss of momentum
  • Often accompanied by:
    • Decreasing volume
    • Divergence (RSI, MACD)
    • Strong support or resistance levels

🔻 Bearish Reversal Patterns (Uptrend → Downtrend)

Common examples:

  1. Head and Shoulders
  2. Double Top
  3. Triple Top
  4. Rising Wedge
  5. Bearish Engulfing (candlestick)
  6. Evening Star

👉 These suggest buyers are losing control.

🔺 Bullish Reversal Patterns (Downtrend → Uptrend)

Common examples:

  1. Inverse Head and Shoulders
  2. Double Bottom
  3. Triple Bottom
  4. Falling Wedge
  5. Bullish Engulfing (candlestick)
  6. Morning Star

👉 These suggest sellers are losing control.

Confirmation Tools (Very Important)

Never trade reversal patterns alone. Use confirmation such as:

  • 📊 Break of neckline / structure
  • 🔊 Volume expansion
  • 📉 RSI divergence
  • 📐 Support–Resistance zones
  • ⏱️ Multiple timeframe alignment

Practical Tip

“The stronger the prior trend, the more reliable the reversal pattern — once confirmed.”