What is Reversal?

The end of one trend and the birth of the opposite one — confirmed by structure, not by feelings about price being too high.

A reversal is the transition from one trend to its opposite: an uptrend rolling over into a downtrend, or a downtrend basing and turning up. It differs from a pullback in permanence — a pullback respects the trend's structure and resumes, while a reversal breaks it and builds a new sequence of swings in the other direction. Because tops and bottoms are where the largest moves begin, reversals attract traders, and because they are rare relative to continuations, reversals also punish impatience more than any other setup.

Structure gives the honest checklist. A mature reversal typically shows: a sweep of a significant high or low (the fuel), a change of character breaking the protective swing (the first evidence), displacement away from the extreme (the aggression), and then a lower high or higher low that holds (the confirmation). Trying to pick the exact top or bottom before these appear is guessing dressed as analysis. The disciplined alternative is to let the market prove the turn and enter on the first pullback of the new trend — later, but with the odds finally on your side.