Which Price Patterns Indicate Turning Points in Equities?

In trading, catching the right time of entry and exit reflects the skills of a pro trader.  Even strong trends can reverse suddenly and begin moving in the opposite direction. These turning points show up on the chart before they show up in the news. And for traders, reading these signals early can make a huge difference in entries, exits, and risk control.

You can catch the turning points by reading price behaviour and common chart patterns that signal exhaustion, trapped traders, or fresh interest from the other side. This blog will help you identify trend reversal patterns that appear on the chart.

What is a Turning Point in Trading?

A turning point can be:

• A downtrend turns up (reversal)
• An uptrend turns down (breakdown)
• Or momentum dying and moving into a side range

This usually happens due to one side (buyers or sellers) running out of energy and the other side pushing back.

We will discuss the key reversal price patterns traders use at market bottoms and market tops, including setups seen in 52-week low stocks and 52-week high stocks.

Key Reversal Price Patterns Traders Use at Market Bottoms

Here are patterns for reversal during a downturn.

1. Double Bottom

In this pattern, price hits a low, bounces back to a certain level called the neckline, and again comes back to the same low level but fails to break the lower. It forms a ‘W’ shape on the chart. This means the sellers tried twice to break the lower but failed in the second attempt.

The real trade begins when the price breaks the middle resistance (neckline). Traders should enter the trade once the neckline is broken. Volume spikes during the break confirm the pattern reversal.

2. Hammer Candle

A hammer candle looks like a candle with a long tail at the bottom. This means the price dropped sharply, but buyers stepped in aggressively, reversing the trend. A hammer candle in the 52 week low stocks is a big sign that selling pressure is fading.

Tip: Enter only if the next candle closes higher than the hammer’s high.

3. Bullish Engulfing

In this pattern, a red candle is followed by a strong green candle completely covering the previous red candle. It shows a strong buying comeback and often marks the start of a reverse trend. It works best after a sharp drop in stocks.

Key Reversal Price Patterns Traders Use at Market Tops

Here are some reversal patterns during the upward trend.

1. Head and Shoulders

This pattern looks like 3 peaks, with the middle peak being the highest. It represents that the buyers pushed hard but failed in the second attempt. The breakdown below the neckline confirms the trend reversal. Increased volume during a neckline break is often a strong signal of trend reversal.

Traders should wait for the neckline break before entering the trade. SL should be above the last failed top.

2. Triple Top

This pattern forms when there are three failed attempts to break the same high. This means buyers are weakening and sellers are defending the high zone. The trade begins when the price breaks the support below the pattern. Traders should wait for the support break before shorting.

3. Shooting Star Candle

A candle with a long upper wick shows the price tried to rally upward but failed. It means demand is weakening at highs. This is a strong signal for 52 week high stocks. Traders should short only if the next candle closes lower than its body low.

4. Bearish Engulfing

A big red candle swallows the previous green candle, forming a bearish engulfing pattern. It shows buyers are trapped, and profit booking or new shorts are entering.

Final Thoughts

As a trader, having the basic knowledge of reversal patterns is essential. Spotting the turning points early gives traders a key advantage. If you understand these patterns and confirmations, trading becomes clearer, cleaner, and more controlled.