A pullback (or "retracement") is a temporary movement against the main trend, where the price retracts before continuing in the original direction. It is a natural pause in the market, caused by profit-taking, balance of forces between buyers/sellers, or technical adjustments.
Key Characteristics
1. Occurs in trends:
- In a bullish trend: The price briefly drops (e.g., from $150 to $145) before continuing to rise.
- In a bearish trend: The price briefly rises (e.g., from $140 to $143) before continuing to fall.
2. It is not a trend change:
- It is a minor and temporary movement. If the price breaks key supports/resistances, it is no longer a pullback, but a reversal.
3. Typical pullback zones:
- Moving averages (MA50, MA200).
- Fibonacci levels (38.2%, 50%).
- Previous support/resistance.
- Potential pullback: If the price retraces to $145.27 (MA50) and bounces, it would be a buying opportunity to follow the rise.
Example with $SOL
How to Use It in Trading?
🧠🤔
1. Identify the main trend (using MA, trend lines).
2. Wait for the retracement to a key level (e.g., MA50, support).
3. Enter with confirmation:
- Reversal candles (🔨).
- Increase in volume in the direction of the trend.
