Definition ∞ Reversal potential describes the likelihood of an asset’s price trend changing direction. Technical analysts assess reversal potential by observing specific chart patterns, indicator divergences, and volume shifts. It suggests that a prevailing upward or downward price movement might soon conclude and reverse course. Identifying this potential is crucial for traders seeking to enter or exit positions strategically.
Context ∞ In cryptocurrency markets, discussions about reversal potential are common during periods of extended price trends, whether upward or downward. News articles often highlight technical indicators or on-chain metrics that suggest a possible shift in market momentum. Traders frequently scrutinize these signals to anticipate changes in digital asset valuations.
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