Introduction
One of the most common challenges faced by market participants is determining whether a market is simply pausing or genuinely changing direction.
A strong advance begins to pull back.
Questions immediately arise:
- Is this a buying opportunity?
- Is the trend ending?
- Is the market reversing?
- Is this merely a temporary correction?
Similarly, during a decline, a rally often causes uncertainty.
Participants wonder whether weakness has ended or whether the market is simply experiencing a temporary recovery before continuing lower.
These questions are not unique to beginners.
Even experienced market participants continually evaluate whether current behaviour represents continuation or reversal.
One way to improve interpretation is by understanding the characteristics commonly associated with each.

