A change in the direction of a market that goes beyond a normal correction point. It is a change of direction that lasts for longer periods where the prices of stocks or other securities move in an opposite direction and continue in the new direction for extended periods. A trend reversal (or simply, a reversal) marks the maturity of a current trend and the beginning of a new one in an opposite direction. As a trend matures, the market enters a distribution stage where both buyers and sellers become in equilibrium (a situation very similar to a range market).

A reversal may occur anytime over the course of an ongoing trend. Traders who can identity a reversal would be able to embark on new trades given the emerging new reality in the market. Reflecting a change in the overall trend of price, it takes place when an uptrend switches to a downtrend.