Trading glossary
Retracement (pullback): meaning in trading
A retracement, or pullback, is a temporary move against the direction price has just moved.
After a strong move, price rarely continues in a straight line. It pulls back before the next leg.
Why we wait for it
Entering on the pullback after a change of character gives a better price and a smaller stop than chasing the breakout candle. If price never pulls back, there is no trade, and that is fine.
Learn more
Lesson: The pullback entry
Guide: The Asia session range strategy
Related terms: Change of character (CHoCH) · Fair value gap (FVG) · Stop loss