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Pullback

A pullback is a temporary move against the trend, or back to a level price has just broken, before the main move resumes.

The word covers two related things. In a trend, it is a retracement: in a rally, price drops back to a moving average, support or a Fibonacci level before moving on. After a breakout, it is the retest of the broken level, which switches role.

Entering on a pullback rather than on the impulse allows a tighter stop and a better risk-reward ratio. The trade-off: some strong moves never come back, and you can miss the train.

The hard part is telling a pullback from a real reversal. Structure helps: as long as the last significant low holds in a rally, the dip is still a pullback.

The full lessonBreakouts and fakeouts: how to spot the real signalClose, volume, retest: what makes a valid breakout. Learn why false breakouts and stop hunts happen, then practise reading breakouts bar by bar in replay.← Full glossary