Here the correct answer is Had reversed. Key Points:- In the above given sentence, 'had reserved' will be used. It is so because the sentence is past perfect tense. In past perfect tense we follow the given structure:- Structure - Subject + had + V3 + Object. For Example - He had left for India. Therefore, we use V3 form of the verb with 'had'. The only option which contains the V3 form of the verb with 'had' is option 2. The other options are wrong because we cannot use V1 form of the verb, present participle form of the verb with 'had'. 'Have reversed' cannot be used because 'situation' is a singular noun and we cannot use 'have' with a singular noun. Therefore, the correct sentence is I could see that the situation had reversed.