Reversal
Technical analysisA change in the prevailing direction of price.
In plain terms
Judge it on closing prices, not on wicks. Intraday probes through obvious levels are routine.
1492 terms
Glossary
Every term is defined twice: once the way a filing would put it, and once the way somebody would explain it to you across a table. The second one is usually the one that sticks.
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Island reversal
Technical analysisA cluster of sessions isolated by a gap on each side, marking a reversal.
In plain terms
Everyone who bought on that island is trapped, and their exit fuels the move.
Role reversal
Technical analysisThe tendency of broken resistance to act as support afterwards, and vice versa.
In plain terms
Everyone who sold at ₹400 and watched it run to ₹450 will buy on a return to ₹400.
Double top
Technical analysisA reversal pattern where price fails twice at the same level, confirmed only when the low between the two peaks breaks.
In plain terms
Calling it while price is still approaching an old high is one of the more reliable ways to short a strong uptrend. Until the intervening low goes, this is a test of resistance.
Evening star
Technical analysisA three-candle bearish reversal: a strong green candle, a small hesitant one, then a red candle closing below the first candle's midpoint.
In plain terms
Conviction, hesitation, handover. Look at almost any stock that topped out badly and some version of this shape is there.
Head and shoulders
Technical analysisA reversal pattern of three peaks with the middle highest, completed on a break of the neckline.
In plain terms
Three rallies, each recruiting fewer buyers. Volume must fade into the right shoulder.
Morning star
Technical analysisA three-candle bullish reversal: a large red candle, a small indecisive one, then a large green one.
In plain terms
Panic, pause, recovery. The anatomy of most bottoms.
Pullback entry
Technical analysisBuying a temporary decline within an established uptrend, at a moving average or Fibonacci retracement, on a bullish reversal candle.
In plain terms
The best risk-reward of the common templates, because the stop sits just under a nearby low. Skip it when the pullback arrives on heavier volume than the advance — that is distribution.
Deferred tax
AccountingThe difference between accounting and taxable profit, carried as an asset or liability.
In plain terms
It can swing reported profit with no cash moving. A profit beat from a deferred tax reversal is not an operating improvement.
Profit quality
AccountingHow well reported profit converts into cash and how repeatable it is.
In plain terms
Profit flattered by a tax holiday or a deferred tax reversal is real but not repeatable.