Trend Retracement or Reversal1 min read
Retracements are temporary price reversals that happen within a bigger trend. Retracements in an uptrend are characterized by higher lows and higher highs. The key here is that these price reversals are temporary and do not indicate a change within the larger trend.
A reversal, on the opposite hand, is when the trend changes direction. With a reversal, the worth is probably going to continue therein reversal direction for an extended period. Reversals are often characterized by patterns that are contrary such as double tops.
Despite the retracements, the long-term trend shown within the chart remains intact. The price of the stock remains rising . When the price moves up, it makes a new high, and when it drops, it begins to rally before reaching the previous low. This movement is one among the tenets of an uptrend, where there are higher highs and better lows. While that is occurring, the trend is up.
It is just one occasion an uptrend makes a lower low and lower high that the trend is drawn into question and a reversal might be forming.
A reversal is when the worth trend of an asset changes direction. It means the worth is probably going to continue therein reversal direction for an extended period. These directional changes can happen to the upside after a downward trend or the downside after an upward trend.