A reversal is confirmed when price breaks the swing points that defined the old trend. In an uptrend, that means falling below the last higher low, then failing to make a new high.
One break is a warning. A new lower high confirms it.
After breaking a key level, price often returns to test it from the other side. Old support can become new resistance. Many traders wait for this retest before entering.
Economies and markets move through four repeating phases, often compared to seasons: expansion, peak, contraction and trough.
Each phase favours different assets and approaches. The cycle repeats, but never on a fixed schedule.
Growth picks up, companies hire, earnings rise and confidence builds. Shares tend to perform well and trends are steady.
Central banks usually keep rates low early on, then begin raising them as growth strengthens.
Growth tops out. Prices are high, optimism is widespread and risks tend to be underpriced.
Momentum slows even while headlines are still positive. Inflation and interest rates are often near their highest here.
Growth slows, earnings disappoint and caution spreads. Shares fall and money moves toward safer assets.
Central banks start to consider cutting rates. Rallies in this phase are often short-lived.
Activity bottoms out and pessimism peaks. Prices are low and headlines are gloomy, but this is often where the next expansion quietly begins.
Markets usually start recovering before the economic news does.
Structure tells you when a trend has turned. The cycle tells you what usually comes next.
