When a trend reverses direction, the price action typically traces out a formation known as a reversal pattern. The larger and deeper the pattern, the greater is its significance. Patterns that are formed at market tops are called distributionformations, i.e., the stock or market is assumed to be undergoing distribution from strong, informed hands to weak, uninformed buyers. Price patterns at market bottoms are known as accumulation formations. Price formations, may also represent temporary interruptions of the prevailing trend, in which case they are called continuation patterns.
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