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reversal pattern

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Financial Dictionary

reversal pattern

In technical analysis, a chart formation that indicates a market top or a market bottom. A reversal pattern, which usually occurs after a major movement in the price of a stock or in the entire market, is an indication that investors should adjust their positions to take advantage of the coming change in market direction. A saucer and a head-and-shoulders are reversal patterns.

Wall Street Words: An A to Z Guide to Investment Terms by David L. Scott.
Copyright © 2003. Published by Houghton Mifflin.
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