The sequence follows this pattern: Term, Reverse(Term), Term+NextLetter, Reverse(Term+NextLetter), and so on. Example: 1: AB, 2: BA (reverse of 1), 3: ABC (AB + C), 4: CBA (reverse of 3), 5: ABCD, 6: Expected to be the reverse of 5 (ABCD) which is DCBA. This matches option (3).