A reversal chart is a type of chart that is used to identify potential trend reversals in the stock or option market. It typically consists of two lines: a shorter-term moving average (such as a 50-day or 100-day moving average) and a longer-term moving average (such as a 200-day moving average). The chart is used to identify potential trend reversals when the shorter-term moving average crosses above or below the longer-term moving average.

For example, if the shorter-term moving average crosses above the longer-term moving average, this could be interpreted as a potential bullish reversal, as it suggests that the stock or option is gaining momentum and may be ready to trend higher. On the other hand, if the shorter-term moving average crosses below the longer-term moving average, this could be interpreted as a potential bearish reversal, as it suggests that the stock or option is losing momentum and may be ready to trend lower.

It's important to note that reversal charts should be used in conjunction with other tools and analysis techniques, as they are just one piece of the puzzle when it comes to making informed trading decisions. It's also important to be aware that trend reversals are not always predictable, and that there is no guarantee that a reversal will occur even if the conditions seem to be present.