In reversal chart patterns, all the shapes which are formed on the charts might lead to a trend reversal. In today's session, let us discuss more on types of reversal patterns and their formations in detail:
As the name itself describes, the security forms a top – makes a small correction – turns back to make second top same as the first and finally makes a new low. Technically speaking, the two tops formed at the top indicate the strong resistance. As a result, the stock failed to cross the same and returned to its low. This normally forms at the top of the stock giving a trend reversal from bullish to bearish.
More important patterns are as follows: