1. Price Action Reversal Signals
Price action provides some of the clearest visual clues. These include:
Candlestick Reversal Patterns
Certain candlestick patterns often mark the beginning of a trend shift, such as:
Hammer and inverted hammer
Bullish and bearish engulfing
Morning star and evening star
Doji-based reversals
These patterns reflect indecision or a sudden shift in momentum, making them useful for evaluating potential entry points.
Support and Resistance Break Reversal
When price breaks below support in an uptrend or above resistance in a downtrend, it may signal a reversal. Traders often wait for retests of these levels to avoid reacting to a false breakout.
