A reversal pattern is a chart formation that signals a potential change in the direction of an asset’s price trend. These patterns can indicate that a prevailing uptrend might shift to a downtrend, or vice versa.Common types of reversal patterns include head and shoulders, double tops and bottoms, and triangles. Each of these formations has specific characteristics and implications for traders. For example, a head and shoulders pattern typically suggests that the bullish trend is losing strength and may soon reverse to bearish.Traders look for reversal patterns to make informed decisions about entering or exiting positions. Early identification of these patterns can lead to significant profit opportunities by allowing traders to act before a major price shift occurs.However, not all reversal patterns result in an actual change of trend; false signals, known as “fakeouts,” can occur. Therefore, traders often use additional indicators or tools to confirm signals from reversal patterns before making trades.