Trend Reversal

A trend reversal is not a red candle in an uptrend. It is a break in the sequence. An uptrend reverses when a higher low gives way and rallies then start failing. A downtrend reverses when a lower high gives way and declines then start holding. The word covers that transition, not a target.

Name the last higher low or lower high before you look for the reversal. The reversal begins when that level breaks and the next swing confirms the new direction. Indicators turning down can warn. They do not define it.

A bullish reversal out of a downtrend: break of the last lower high, then a higher low. Buying before the lower high breaks is bottom-fishing, which is a different and riskier trade.

A bearish reversal out of an uptrend: break of the last higher low, then a lower high. Selling the first pullback while higher lows hold is not yet a reversal trade.

Announcing a reversal on a moving-average cross while swing structure is unchanged.

Reversals are obvious late and doubtful early. Most attempts fail and become flags. Size them as attempts until structure confirms.