A trend running out of breath

Reversal patterns are structures that appear at the end of a trend and depict the POSSIBILITY of a change in direction. The core difference from continuation patterns is context: a continuation pattern is a pause in the middle of a trend, while a reversal pattern is a blockage where the trend can no longer advance and keeps turning back from the same area. Think of them as two chapters of the same textbook — the shapes sometimes look alike, but the stories differ.

Reversals rarely happen in a single candle; they are usually a process. First the legs in the trend's direction shorten and momentum fades — the divergences of level 6 accumulate exactly at this stage. Then price fails to clear areas it used to pass with ease, and the swing sequence starts to break down. Reversal patterns are the footprints this process leaves on the chart.

Let us state the critical caution upfront: as long as a trend runs, every pause looks like a reversal — especially to someone who WANTS to see one. In an uptrend, every high "might be a double top" and every consolidation "might be distribution". That is why the completion requirement is even stricter for reversal patterns than for continuation ones: until the structure finishes, there is no story.