Traders watch for price clues alerting them to a shift in market psychology and trend. Reversal patterns are these technical clues. Traditional reversal indicators include double tops and bottoms, head and shoulders, and island tops and bottoms. Trend reversal usualy occurs slowly, in stages, as the underlying psychology shifts gears. A trend reversal signal implies that the prior trend is likely to change, but not necessary reversing. Abrupt reversals occur rarely but they are not uncommon.

Candlestick reversal patterns must be viewed within the context of prior activity to be effective. In fact, identical candlesticks may have different meanings depending on where they occur within the context of prior trends and formations.

Perhaps John J. Murphy explains it best in this short piece, which discusses reversal patterns, from his classic "Technical Analysis of the Financial Markets":

One serious consideration that must be used to identify patterns as being either bullish or bearish is the trend of the market preceding the pattern. You cannot have a bullish reversal pattern in an uptrend. You can have a series of candlesticks that resemble the bullish pattern, but if the trend is up it is not a bullish Japanese candle pattern. Likewise, you cannot have a bearish reversal candle pattern in a downtrend.