There’s a great old saying on Wall Street: The trend is your friend.
But what happens when the trend ends? After all, nothing lasts forever. That’s when things can become troublesome for investors. At least, for those who don’t know the signs.
That’s because a stock’s pattern can give you a clue that a long-running trend is about to end. And whether that means a stock that’s been going up is about to go down, or a declining stock is about to rally.
This is called a reversal pattern. And being able to catch one successfully is one way to grow and preserve your wealth—in any market environment. It’s a good pattern to watch for whether you’re a short-term trader, or a long-term investor looking for the right moment to take profits.