Reversal trading is a strategy where traders look for signs that a current price trend is about to change direction. The goal is to identify opportunities to buy or sell before the market moves in the opposite direction.Traders often use various indicators or chart patterns to spot potential reversals. Common tools include support and resistance levels, moving averages, and candlestick patterns. For example, a price may hit a support level multiple times but fail to break through, suggesting a possible rebound. Reversal trades can be risky since they rely on predicting market movements accurately. Successful traders tend to combine reversal signals with other strategies for better risk management. In practice, reversal trading requires patience and careful analysis. It’s essential to set stop-loss orders to limit potential losses if the trade doesn’t go as planned. Overall, this approach can be profitable for those skilled at reading market trends and willing to act decisively.