Reversal Pattern
Any pattern that signals a change in the prevailing trend direction — Head and Shoulders, Double Tops/Bottoms, and wedges at extremes are classic examples.
A Reversal Pattern is a formation that marks the end of one trend and the beginning of the opposite. It represents a shift in the balance of power between buyers and sellers.
Major reversal patterns: Head and Shoulders, Double/Triple Tops and Bottoms, Rising Wedge at a top, Falling Wedge at a bottom, Rounding Bottom, and Island Reversal.
- Reversal patterns require confirmation — a break of a key level (neckline, prior swing) is the trigger, not the pattern shape alone.
- The larger the pattern (in time and price), the more significant the reversal.
Related Terms
Broadening Formation
Expanding price swings with higher highs and lower lows, forming a megaphone shape — signals increasing volatility and often precedes a sharp reversal.
AdvancedContinuation Pattern
Any pattern that forms mid-trend and resolves in the same direction as the prior move — flags, pennants, and triangles are the most common.
BeginnerDiamond Pattern
A broadening formation that then contracts into a symmetrical triangle, creating a diamond shape — a rare but reliable reversal pattern.
AdvancedDouble Bottom
Two consecutive troughs at approximately the same price level, forming a "W" shape, signalling support and potential upside reversal.
BeginnerDouble Top
Two consecutive peaks at roughly the same price level, separated by a pullback, signalling exhaustion and potential trend reversal downward.
BeginnerFalling Wedge
Two converging downward-sloping trendlines where the upper line falls faster — a bullish pattern indicating downside momentum is fading.
IntermediateHead and Shoulders
A three-peak reversal pattern where the middle peak (head) is tallest, flanked by two shorter peaks (shoulders), signalling a trend top.
BeginnerInverse Head and Shoulders
A three-trough reversal pattern at a downtrend bottom: the middle trough is deepest, flanked by two shallower troughs, signalling a trend floor.
BeginnerIsland Reversal
A price cluster isolated by two gaps on either side — a sharp reversal signal where the gap-up and gap-down create a gap island.
IntermediateRising Wedge
Two converging upward-sloping trendlines where the lower line rises faster — a bearish pattern signalling that upside momentum is exhausting.
IntermediateRounding Bottom
A gradual, semicircular base where selling pressure slowly transitions to buying — a long-term bullish reversal pattern.
IntermediateTriple Bottom
Three tests of the same support level that all hold, signalling firm demand and a likely bullish breakout above the intervening peaks.
BeginnerTriple Top
Three failed tests of the same resistance level, indicating sellers are firmly in control and a bearish breakdown is likely.
Beginner