As stock prices move, they do so in trends, i.e. a particular movement in one direction for a finite period of time. Because the period of time is finite, eventually the movement will stop and go in the opposite direction. This is what is referred to as a reversal. When a reversal is in process, the movement forms a pattern that can be charted.
Reversals can last for different durations. A one-day reversal is a pattern that is completed within a day's trading and usually doesn’t signify much of an immediate move in the opposite direction.
Short-term reversals that last longer than a day are referred to as spikes. A spike happens when a market has become very overextended in one direction or when a sudden piece of unfavorable news causes concern about the future of a market. Reversal spike highs and lows can signal a reversal of a trend.
The large reversals last for a significant period of time and are characterized by wide price fluctuations and a large number of shares being transferred. This kind of reversal is called a reversal pattern because it marks a definite change in a trend.
There are some well-known reversal patterns like the "Head and Shoulders Top". When it is charted it is characterized by three peaks, the middle peak that is higher than the other two, the "head" and two outer peaks, which are the "shoulders". If you examine the pattern, you see there are two low points where each shoulder connects with the head. You can draw a line connecting the low points, which forms a "neckline". The ability to draw this neckline means that the pattern is complete and the previous trend has been reversed. The "Head and Shoulders Top" reversal occurs after a long uptrend in the market.
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