How to Determine When a Reversal Is Going to Take Place – Complete Course Guide


Identifying a market reversal is one of the most important skills a trader can learn. Whether you’re trading forex, crypto, stocks, commodities, or indices, knowing when a trend is likely to reverse can dramatically improve your win rate and reduce unnecessary losses. Most traders blow accounts not because they don’t know how to trade—but because they enter against trends too early or too late.


This course overview will break down how to determine when a reversal is going to take place, using a combination of price action, volume, market structure, indicators, and smart-money concepts (SMC). The idea is to teach traders how to think like institutional players instead of chasing obvious patterns.


The concepts below are beginner-friendly yet deep enough for advanced traders who want to refine their reading of market shifts. Let’s begin.


1. Understanding What a Reversal Really Is


Before spotting reversals, you must understand what actually causes them.


A reversal happens when:



  • Market structure breaks

  • Order flow shifts

  • Buying pressure turns into selling pressure (or vice versa)

  • Liquidity has been taken

  • Smart money finishes accumulating or distributing


Many beginners assume a reversal is just when price touches support or resistance. But that’s only a tiny part of the picture.


A true reversal shows:



  1. Loss of momentum

  2. Market structure break (CHOCH/BOS)

  3. Volume confirmation

  4. Liquidity sweep

  5. Retest before continuation


If these five pieces line up, probability of reversal becomes extremely strong.


2. Price Action Signals of a Reversal


Price action is the most reliable method to determine a reversal. In this course, we break it down into simple categories.


2.1 Market Structure Break (CHOCH & BOS)


The first true sign of reversal is when price breaks structure.



  • CHOCH (Change of Character): early sign

  • BOS (Break of Structure): confirmation


Uptrend → Higher Highs & Higher Lows
Downtrend → Lower Highs & Lower Lows


When those patterns break, something big is happening.


2.2 Liquidity Sweeps (Stop Hunts)


Smart money hunts stop-losses before reversing the market.


Signs:



  • Price spikes above previous high → instantly dumps

  • Price wicks below previous low → quickly reverses upward


This shows liquidity has been taken and a reversal is likely.


2.3 Reversal Candlestick Patterns


Some candlestick patterns are highly effective when combined with other confluence.



  • Pin Bar

  • Engulfing Pattern

  • Morning Star

  • Evening Star

  • Hammer & Inverted Hammer

  • Tweezer Top / Bottom


But remember: use patterns only with structure and volume confirmation.


3. Volume as a Reversal Tool


Volume reveals the intention behind price movement.


3.1 Climax Volume


A strong reversal often begins with sudden high volume spikes, indicating:



  • Buyers exhausted

  • Sellers stepping in aggressively

  • Liquidity grabbed


Once you see a huge candle with massive volume after a long trend → prepare for reversal.


3.2 Divergence Between Price & Volume



  • Price makes a new high

  • Volume is decreasing


This means trend is weakening.


4. Indicator-Based Reversal Confirmation


Indicators alone don’t predict reversals, but they help confirm what price is already showing.


4.1 RSI Divergence


Classic reversal signal.


If price forms a higher high but RSI forms a lower high → bearish divergence.
If price forms a lower low but RSI forms a higher low → bullish divergence.


4.2 Moving Average Crossovers


Popular combinations:



  • 50 EMA & 200 EMA

  • 20 EMA & 50 EMA


When fast MA crosses slow MA, trend reversal probability increases.


4.3 MACD Reversal Signal


MACD crossing the signal line during exhaustion candles helps confirm momentum shift.


4.4 Bollinger Bands Reversal


When price touches outer band, then closes inside → reversal probability increases.


5. Smart Money Concepts (SMC) for Detecting Reversals


This course also covers professional techniques used by institutional traders.


5.1 Order Blocks


A reversal commonly begins from:



  • Bullish Order Block (OB) in a downtrend

  • Bearish Order Block (OB) in an uptrend


Price will retest these zones before reversing strongly.


5.2 Fair Value Gaps (FVG) Imbalance


When price leaves an imbalance, it often returns to fill it before reversing.


5.3 Market Structure Shifts


Institutional reversal pattern:



  1. Sweep liquidity

  2. Break structure upward/downward

  3. Return to order block

  4. Strong continuation


This pattern is used in ICT/SMC methodology.


6. Key Confluences to Wait for Before Entering a Reversal


Never enter a reversal based on just one signal.
Wait for at least 3–4 confluences:



  • Liquidity sweep

  • CHOCH/BOS

  • Strong volume confirmation

  • Rejection candlestick

  • Retest of OB/FVG

  • Divergence

  • Momentum loss


The more confluences you have, the safer the reversal trade.


7. Common Mistakes Traders Make While Predicting Reversals


7.1 Entering Too Early


Most traders get caught by entering before the structure break.


7.2 Trusting Indicators Alone


Indicators lag. Price leads.


7.3 Ignoring Higher Timeframe Trend


Reversal on M5 means nothing if H4 is still trending strong.


7.4 Not Waiting for Retest


Smart entries happen after retest of OB/FVG—not at the first sign of break.


8. Simple Step-by-Step Method to Identify a Reversal


Here is a course-style checklist:


Step 1 – Identify Higher Timeframe Trend


Use H1/H4 to understand where the market is heading.


Step 2 – Look for Liquidity Levels


Mark highs & lows.


Step 3 – Wait for Liquidity Sweep


This is the first sign.


Step 4 – Identify CHOCH / BOS


Market structure must shift.


Step 5 – Check Volume / Divergence


Weakening momentum means reversal is real.


Step 6 – Wait for Price to Retest OB or FVG


Institutional entry point.


Step 7 – Enter with Tight Stop Loss


Place stop below OB/FVG.


Step 8 – Let Trade Play Out Naturally


Avoid emotional interference.


9. Conclusion – Master the Art of Spotting Reversals


Determining when a reversal is going to take place is not about guessing. It’s about understanding how price behaves, how liquidity moves, and how institutional traders operate behind the scenes. Once you master market structure, volume, divergence, and SMC principles, reversal trading becomes much simpler.


This course guide gives you the foundation—now practice on charts, backtest setups, and refine your understanding with real market situations.


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