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What Is a Reversal Pattern

A reversal pattern is a shape at the end of a move, after which the price goes the other way. This paper shows you a real one drawn from the pound's rise and fall in the summer of 2025, the idea as the summit of a hill, the pattern on the daily chart with the move before and the move after, the four shapes a turn usually takes, and how to label the parts of one on your platform.

Difficulty
Intermediate
Reading time
5 min
Pages
8
Reviewed by
Saman Rahbar

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A rise in, a fall out

A reversal pattern is a shape at the end of a move, after which the price goes the other way. The pound against the dollar rose through May and June 2025 into three peaks — 1.36317, 1.37881 and 1.35887, a head and shoulders — and on 28 July closed at 1.33511, under the neckline at 1.33697. Before the shape the price was rising; after it, falling. The shape sits at the turn, and the name is given once the move after it has gone the other way.

The summit

The picture is a hill. The move before is the climb, the move after is the descent, and the reversal pattern is the shape of the summit: the weeks where the climb had stopped and the descent had not yet begun. A double top, a triple top and a head and shoulders are three shapes a summit can take. Turned upside down, at the bottom of a valley, the same shapes are reversals the other way, from a fall into a rise.

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