⚠️ Many people enter buy positions during (reversal) thinking it is a bullish trend. However, the price drops (falls) again.
Here we need to distinguish between:
(Reversal) and (Correction) and (Trend)
🎯 Reversal
It is a temporary movement (against the general direction of price). Its shape on the chart appears as (two candles) or a one-day movement, and it occurs without breaking resistance.
☝️ And quickly..
The meaning of the word (Resistance) is a price area that the currency reaches, making it difficult for the price to continue rising further. The reason is that there is a lot of selling on the currency, which pressures the price and causes it to drop further.
- and reversals come in two types:
1. Bullish Reversal:
The price is falling and suddenly stops dropping and starts to rise a bit.
2. Bearish Reversal:
The price is rising and suddenly stops rising and starts to drop a bit.
✅ Example:
If a currency dropped from $180 to $145, and then rose to $155 (this is a reversal). However, it doesn't necessarily mean a return to rising and recovery of the currency; it could just be a temporary rise before continuing its decline.
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🎯 Trend
It is the general direction of price movement. If you zoom out on the chart to see it from a distance and notice that:
1. The price is generally rising → this is a bullish trend
2. The price is falling → this is a bearish trend
3. No significant rise or fall → Sideways Trend (Fluctuation)
✅ The trend is what determines whether you start buying or selling.
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🎯 Correction
It is a temporary movement against the general trend, and it is often deeper than a simple reversal. The correction can last for days or weeks, but it does not change the main trend.